Hold Jubilant Foodworks; target of Rs 495: Prabhudas Lilladher

Prabhudas Lilladher's research report on Jubilant Foodworks

JUBI concall highlighted the growth trajectory and plans for DP Eurasia and Bangladesh. JUBI recently increased stake in Dp Eurasia to 94% while it had increased stake in Bangladesh to 100% in 2022. The Turkish business presents an attractive long-term prospect driven by geographical expansion (addition of 560 stores in medium term), 51% market share, strong brand recall, the expanding COFFY network, and a margin-accretive franchise model that reduces store operating costs. However, currency devaluation remains a significant concern due to the continuous downtrend of the Turkish currency (Lira has depreciated from Rs28INR in 2012 to current levels of 2.5).

Outlook

Bangladesh business is still in the nascent phase, with only 26 stores. Nevertheless, it is experiencing robust growth in existing stores and presents an opportunity to expand into more cities, making it a good option for expanding the footprint in international markets. India business remains under pressure due to tepid demand in Pizza category and increase in competition. Popayes is shaping up well and is targeting Rs10bn sales in fastest time by any QSR. We shall incorporate the numbers of DP Eurasia on getting more clarity on numbers. Rough estimates suggest that International business will add Rs1.5 to the consol EPS, with Turkey being the main contributor. The stock currently trades at 52.7xFY26 standalone EPS. Retain hold.