Sharekhan's research repor on Jubilant FoodWorks
Jubilant Foodworks Limited’s (JFL) revenue decreased by ~19% to Rs. 805 crore in Q2FY2021; Delivery channel’s revenue grew by 5.8% and takeaway channel grew by ~50%. Benign input prices, delivery charges of Rs. 30 per order, and reduction in wastage aided gross margins to improve by 352 bps to ~79%; Gross margin trajectory is likely to be 76-77% in the coming years compared to 74-75% earlier. As part of its cost-saving strategy, the company has shut down 105 non-profitable outlets in H1FY2021, which will not have any major impact on revenue as a large number outlets are dine-in outlets (will add 100 new stores in FY2021 with re-modelled store format). Rising trend of digital ordering and shift to top brands will help JFL to post better performance in the quarter ahead.
Outlook
We recommend Buy with price target (PT) of Rs. 2,799.
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