Prabhudas Lilladher's research report on Jubilant FoodWorks
JUBI’s 1Q results were in line on a covid impacted base. JUBI opened 58 Domino’s stores which is the highest number of stores opened in 1Q and remains on course to open 250-300 stores in FY23. Popeyes has seen favourable consumer feedback with repeat consumpton and remains on course to open 20-30 stores in FY23, However, we expect long road ro profitability for this new chain. Loyalty programme – Cheesy Rewards will employ a milestone model to increase order frequency, bring in new users to the brand & enable customer stickiness but its impact on profitability depends upon increase in throughput. We believe newer ventures like Dunkin Donuts, Hong’s Kitchen and Ekdum are not likely to scale up in near term. We remain constructive on JUBI’s strength in Pizza market but its strategy to emerge as a multi-brand, multi-cuisine food tech company is on crossroads with little visibility in near term.
We estimate 33.0% PAT CAGR over FY22-24 and maintain our BUY rating with a DCF based target price of Rs 700 (Rs 708 earlier). We believe returns might be back ended given impending management change and rising competition.
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