Hold Jubilant Food Works; target of Rs 1383: Edelweiss

Edelweiss' is bullish on Jubilant FoodWorks has recommended hold rating on the stock with a target price of Rs 1383 in its research report dated July 17, 2017.

July 18, 2017 / 15:36 IST

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Edelweiss' research report on Jubilant FoodWorks
Jubilant FoodWorks’ (JFL) Q1FY18 revenue and EBITDA surpassed our estimates. Key positives were: i) 6.5% spurt in SSG (highest since Q1FY16) aided by Every Day value; and ii) 224bps EBITDA margin expansion aided by cost rationalisation (133bps YoY dip in employee cost, 117bps YoY fall in other expenses) and higher SSG. We estimate 313bps EBITDA margin improvement driven by 7.9% SSG in FY18. The company estimates to cut Dunkin losses by half in FY18 (closed 9 stores in Q1FY18). Further, JFL aims to sustain focus on value-for-money offerings across Domino’s and Dunkin’ Donuts. The improvement in numbers coincides with change of guard—new CEO Mr. Pratik Pota. Maintain ‘HOLD’.

Outlook

We maintain ‘HOLD/SP’ with target price of INR1,383. At CMP, the stock is trading at 61.1x FY18E and 46.0x FY19E EPS.

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