Accumulate Jubilant FoodWorks; target of Rs 2941: Prabhudas Lilladher

Prabhudas Lilladher's research report on Jubilant FoodWorks

We are increasing FY21/22/23 EPS by 7.4%/3.2%/5.0% as Domino’s system sales have recovered to 100.3% with January recovery at 106%. We remain postive on JUBI given 1) Increased focus on store opening in coming years with medium term potential of 3000 Dominos 2) lower competition as several smaller players have gone out of business 3) Investment in App being rewarded by record downloads and improved mix order value and 4) huge growth opportunity in segments like biryani (EkDum) and chinese foods (Hongs Kitchen) given lack of large organised players. We believe JUBI’s wide reach and affordable portfolio will enable dine in to grow swiftly once capacity restrictions are lifted. We believe strong cash position and negative working capital provides JUBI an opportunity to create new food services brands. We believe scale up opportunity in Hong’s Kitchen and EkDum provides huge optionality value.

Outlook

We value the stock on DCF and assign a target price of Rs2941 with Accumulate rating (Under review earlier), althogh we expect returns to be backended given rich valuations.