Neutral Jubilant FoodWorks; target of Rs 480: Motilal Oswal

Motilal Oswal's research report on Jubilant FoodWorks

Jubilant Foodworks (JUBI) hosted a concall to give updates about its Turkey (DP Eurasia) and Bangladesh businesses. JUBI has recently increased its stake in both the businesses to close to 100%. It had acquired a 33% stake in DP Eurasia in 2021, which has over the years increased to 94.3% now (49% stake in Nov’2023). The total acquisition cost is INR12bn, which is funded with INR9.5b debt and INR2.5b equity. Besides, JUBI has also increased its stake in the Bangladesh business from 51% to 100% for an incremental cost of INR340m. As per pro forma financial metrics provided by the company, the standalone PAT was INR2.6b in CY23, while international business (DP Eurasia, Bangladesh, Srilanka) combined contributed INR1.4b to PAT in CY23. After adjusting the interest cost, PAT for its international business should be around INR1b.

Outlook

We value the India business at 55x P/E and international business at 35x P/E on FY26E to arrive a TP of INR480 (unchanged). We maintain our Neutral rating; we believe India business recovery will be more critical for the stock’s performance.

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