Buy Jubilant FoodWorks; target of Rs 570: Sharekhan

Sharekhan's research report on Jubilant FoodWorks

Jubilant FoodWorks Limited’s (JFL’s) like-for-like sales declined by 1.3% y-o-y. Decline was lower than our and street’s estimate of a 2-5% decline. Revenue growth of 5.6% y-o-y to Rs. 1,309.7 crore was order-led and partially offset by a fall in ticket prices. EBITDA margins came in at 21.1% (up by 97 bps q-o-q). Stabilising of raw material prices, improved product mix and internal efficiencies would help maintain/improve margins going ahead. EBITDA margin is targeted to improve to 23-24% in 2-3 years. Though Q1 is a slow start to store openings, management has maintained its guidance of opening 200-225 Domino’s stores and 30-35 Popeyes stores in FY2024.

Outlook

Stock is down 27% from highs and is currently trading at 66.5x/45.3x its FY2024E/FY2025E earnings. We maintain our Buy recommendation on the stock with a revised PT of Rs. 570.