Sell Jubilant Foodworks; target of Rs 1270: Motilal Oswal

The four stocks they exited are Macpower CNC Machines, NDR Auto Components, Novartis India and RSWM, according to Dolat Capital.

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Motilal Oswal's research report on Jubilant Foodworks

EBITDA by 59% YoY to INR 1b (est. of INR 677m) and adj. PAT by 124.8% YoY to INR 485m (est. of INR 215m) in 2QFY18. SSS grew 5.5% (est. of +6%) for the quarter. JUBI opened one Domino’s store and closed one store in the quarter.

Outlook

JUBI has in fact lagged other QSR peers like Westlife on SSG growth for the last seven quarters and Yum India for the last four quarters. Despite assuming highly aggressive EPS forecasts, the stock trades at expensive valuations of 59.9x/45.4x FY19/FY20E EPS. Maintain Sell with a revised TP of INR 1,270 (multiple unchanged at 40x Sept’19 EPS).

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