Buy Jubilant Foodworks; target of Rs 2981: Dolat Capital Market

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Dolat Capital Market's research report on Jubilant Foodworks

JFL’s Q3FY21 revenue was in line with our estimate, but APAT was a beat. The company has reported strong recovery in past three quarters with -61.4%/-20%/-1.7% same store sales growth in Q1/Q2/Q3FY21. SSSG during Q3 was better than peer -Westlife Development. The company has reported positive 3.4% SSSG during January’21. In addition to benign RM, GM also benefited from lesser discounts and introduction of delivery charges in Q3FY21. JFL opened 57 new stores during the quarter (50 Domino stores) – highest store addition in a single quarter. Sri Lanka/Bangladesh businesses witnessed 82.5/94.9% sales recovery. Sri Lanka/Bangladesh store count stood at 23/4 respectively.

Outlook

We have revised our FY21/22/23E EPS estimates to Rs 17.6/37.1/45.9 implying +8.1/+2.1/+7.2% revision respectively, to factor in Q3 performance. Considering high growth prospects, valuations are expected to remain rich. Valuing the stock at 65X FY23E to arrive at a TP of Rs 2,981. Upgrade to Buy.

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