Emkay Global Financial's report on Jubilant FoodWorks
JUBI’s Q1 profitability was ~11% ahead of our/street estimates, driven by better margins. Revenues missed estimates by 3-4%. EBITDA margins stood at 24% (vs. estimate of 21%), aided by lower staff costs resulting from a variable pay structure. JUBI witnessed nearly a 100% sales recovery in operational stores in Jun’21 vs. ~94%/88% in Apr/May’21 (compared to Q1FY20 level). The easing of lockdown curbs and improvement in hours of operation should result in a stronger recovery from Q2. Store addition for Domino’s was low (20 new stores) in Q1 due to lockdowns. But JUBI’s expansion plan is aggressive, with a target of 150-175 new stores in FY22. Management is upbeat about digital and tech initiatives aimed at becoming a food tech powerhouse.
Outlook
JUBI offers a strong growth outlook with solid expansion plans and increased investments in digital and tech initiatives, which can further strengthen leadership and offer efficiency gains ahead. Maintain Buy with a TP of Rs3,400, based on 55x Sep’23E EPS.
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