Reliance Securities is bullish on Jubilant Foodworks has recommended buy rating on the stock with a target price of Rs 1000 in its research report dated January 10, 2017.
Reliance Securities' research report on Jubilant Foodworks
Jubilant FoodWorks (JFL) has been undergoing a tumultuous time for last few quarters – marked by stagnant Same Store Sales (SSS) growth, pressure on margins and high level exits – with which the stock has corrected by 40% in past one year and by 22% in past three months. Despite near-term uncertainties, we believe that risk reward ratio is turning to be favourable, while revival in SSSG could be the most vital factor to watch out for, going forward.
We expect JFL to post revenues of Rs 30.4bn & Rs 35.4bn & net profit of Rs 1.4bn & Rs 2bn in FY18E & FY19E, respectively. We peg JFL’s SSSG at 7% & 8% for FY18E & FY19E, respectively on the back of steady recovery in consumer demand and higher sales of value added products. Based on expected EPS of Rs 21.3 & Rs 31, the stock currently trades at price earnings multiple of 38.8x FY18E & 26.6x FY19E earnings. We initiate our coverage on the stock with BUY recommendation and Target Price of Rs 1,000 based on a combination of DCF and PE valuation methodology.
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First Published on Jan 18, 2017 01:10 pm