Hold Jubilant FoodWorks; target of Rs 570: Sharekhan

Sharekhan's research report on Jubilant FoodWorks

Though JFL has undertaken required steps to improve its sales, any substantial recovery in the same-store-sales growth will take some time. Management aspires to deliver SSSG of 5% in the medium term. Store additions should add 8-10% to revenue growth. JFL posted yet another quarter of muted growth, with revenue growing by 4.5% y-o-y to Rs. 1,345 crore (like-for-like (LFL) sales declined by 1.3% y-o-y). Delivery channel posted 7.9% y-o-y order-led growth, while dine-in fell by 3.8% y-o-y. EBITDA margins declined by 341 bps y-o-y to 20.9%, despite stable gross margins due to investments in store expansion/reimaging and technology enhancements. With the investments likely to continue, EBITDA margin is expected to be at 22-23% in 2-3 years.

Outlook

We downgrade our rating on Jubilant Foodworks (JFL) to Hold from Buy earlier with an unchanged PT of Rs. 570. The stock trades at 93x/61x its FY2024/25E earnings.

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