Prabhudas Lilladher's research report on Jubilant FoodWorks
JFL reported mixed nos with 11.6% LFL growth but a miss on GM and EBIDTA as it chased growth led by higher investment behind new customer acquisition, product innovations and digital investments. We expect healthy double digit earnings growth in coming quarters led by 1) improving demand scenario and 2) robust innovation and 3) sustained efforts on providing superior value to customers. We believe FY26 margins to remain flat amidst higher store addition and investmetn behind growth. However, improving demand scenario, benefits of technology investments and a healthy SSG will aid ~117bps margin expansiom in FY27. JUBI is focusing on driving volumes by innovations, low priced meals, discounting and zero delivery charges in a tepid demand environment, which will boost growth once the broad based demand revial sets in. Popeyes is witnessing good traction and with improving economics, losses are likely to be lower over next 2 years. Dp eurasia continues to remain impacted by inflation which has now eased off to 34% in Turkey. We estimate 51.2% standalone EPS CAGR over FY25-27 on a low base.
Outlook
We have assigned 35xJune27 EV/EBIDTA to standalone nos and arrive at value of Rs623/share and 22x EV/EBIDTA to dp eurraisa (Rs 65/share) on its Q2CY27 earnings. We assign an SOTP based target price of Rs688. JUBI seems best placed in QSR space to gain from expected improvement in consumer demand. High inflation and Currency headwinds remain in risk in turkey operations. Retain Hold.
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