Accumulate Jubilant Foodworks; target of Rs 2566: Dolat Capital Market

Dolat Capital Market's research report on Jubilant Foodworks

JFL’s Q2FY21 results were ahead of our estimate, with -20% same store sales growth (SSSG). During Q2FY21, July/August/September’20 witnessed gradual sales recovery to 69.8/85/92% of last year sales. During October, the company recovered 96.2% of last year sales driven by delivery growth of 16.3% and takeaway growth of 64.3% YoY. In addition to benign RM, GM also benefited from lesser discounts and introduction of delivery charges in Q1FY21. JFL closed down 100 unprofitable Domino stores (>2/3rd contribution of dine-in). We believe that this would help improve margins significantly. Sri Lanka/Bangladesh businesses witnessed 87/81% sales recovery. Sri Lanka reported positive EBITDA for second consecutive quarter.

Outlook

We have revised our FY21E and FY22E EPS estimates to Rs 16.3 and Rs 36.4 respectively, to factor in Q2 performance and introduced FY23E EPS at Rs 42.8. Valuing the stock at 60X FY23E to arrive at a TP of Rs 2566. Upgrade to Accumulate.