Accumulate Jubilant FoodWorks; target of Rs 515: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Jubilant FoodWorks with a target price of Rs 515 in its research report dated May 17, 2023.

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May 19, 2023 / 06:52 IST

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Prabhudas Lilladher's research report on Jubilant FoodWorks

We cut our FY24/FY25 EPS estimates by 9.5%/8.9% and rating from Buy to Accumulate post recent run in stock price following 1) tepid demand with current recovery only being seasonal 2) delayed margin recovery in inflationary environment & heightened competition 3) increase in initial losses in Popeyes and 4) sustained high capex guidance of Rs7bn including Mumbai commissary. JUBI’s strategy revolves around consumer value proposition, leveraging data & tech, operational excellence and building a foundation of people & culture. JUBI will continue to invest behind in Dominos (200-225 store additions), Popeyes (30-35 store additions) and Mumbai commissory. Loyalty programme – Cheesy Rewards continues to see strong enrollment of 13.6mn users since launch in May’22, with increase in order contribution to 45%, improved order frequency and higher customer stickiness.

Outlook

We remain constructive given JUBI’s strength in Pizza market and strong possibility of Popeyes emerging as second major brand in coming years. We estimate 26.0% PAT CAGR over FY23-25 and cut rating to Accumulate with DCF based target price of Rs515 (Rs500 earlier).

For all recommendations report, click here