Buy Jubilant Foodworks; target of Rs 600: Sharekhan

Sharekhan's research report on Jubilant Foodworks

Jubilant FoodWorks Limited’s (JFL’s) like-for-like sales stood almost flat at -0.6% compared with peers witnessing low single-digit same-store-sales decline in Q4FY2023. Overall revenue growth stood at 8% to Rs. 1,252.3 crore. Domino’s cheesy rewards got good traction with the enrolment growing by 28%; order frequency has increased because of the loyalty programme. The launch of 20-minute service delivery in Bangaluru saw good response with higher sales growth. Management expects like-for-like growth to improve in the quarters ahead. EBIDTA margin at 20% in Q4FY2023 has bottomed-out. With the decline in key input prices and expected softening in cheese prices, EBIDTA margin could recover to 23-24% in FY2024.

Outlook

The stock is down by 26% from its high and is currently trading at 59.0x/41.5x its FY2024E/FY2025E earnings. We maintain our Buy recommendation on the stock with an unchanged PT of Rs. 600.

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