Hold Jubilant Foodworks; target of Rs 951: Edelweiss

Edelweiss' research report on Jubilant Foodworks

Jubilant FoodWorks’ (JFL) Q4FY17 revenue and EBITDA came below our estimates and we expect the stock to be under pressure near term. Key negative was 7.5% SSG dip due to demonetisation. The company’s focus on profitability (has hired AT Kearney to rationalise cost) led to shut down of 13 Dunkin Donuts (DD) and 8 Dominos stores in Q4FY17.

Outlook

GST and loss reduction in Dunkin will be saviors. However, higher competitive intensity from online players (Swiggy, Zomato) and PE-funded food players remains a key monitorable. We maintain ‘HOLD/SU’ with target price of INR 951. At CMP, the stock is trading at 44.8x FY18E and 36.6x FY19E EPS.