Jubilant Foodworks: ‘Purchase’ with revised FV of Rs 3,400

We consider JUBI has the potential to transition right into a multi-brand QSR with unparalleled community advantages.

Retailer enlargement gathers tempo: JUBI’s 4Q print was in keeping with expectations. Retailer openings had been greater than anticipated and forward of steerage: 50 new Domino’s shops (gross) in 4Q (134 in FY2021 versus steerage of 100). JUBI is nicely positioned to speed up Domino’s retailer community enlargement and investments in new manufacturers supply optionality. We consider JUBI has the potential to transition right into a multi-brand QSR with unparalleled community advantages. The corporate is enhancing organizational capabilities— current strengthening of the administration group is a step in that course. BUY.

4QFY21 – Regular quarter with in-line income and marginal miss on profitability: Income grew 14% yoy to Rs10.3 bn in-line with our estimate (+9% 2-year CAGR). Supply channel grew 28.7% yoy and takeaway grew 76.9% yoy. SSSG stood at 11.8%; system gross sales recovered to 114.8% in 4Q. With Covid-19 second wave, system gross sales slowed right down to 94.4% and 87.7% in April and Could-2021 respectively (versus April 2019 and Could 2019). Gross margin stood at 77.5% (KIE: 77.7%). Gross revenue grew 19% yoy and 10% on 2-year CAGR foundation. EBITDA stood at Rs2.5 bn (KIE: `2.6 bn), 6% beneath our estimate partly on account of greater than estimated retailer openings. On 2-year CAGR foundation, EBITDA grew 30% (reported) and about 9-10% on LFL foundation adjusted for Ind-AS 116 adoption. EBITDA margin at 24.3% (KIE: 25.6%) was up 540 bps yoy and down 210 bps qoq. Worker prices elevated 2% yoy and different bills (ex-rent) elevated 12% yoy. Web revenue was at `1.04 bn (KIE: `1.07 bn). Cumulative app downloads elevated to 57.3 m (+ 6.1 m qoq). On-line ordering stood at 98.2% in 4Q, steady qoq, up +960 bps yoy. Cellular ordering inside on-line order stood at 97.4 in 4Q, +130 bps yoy.

Retailer enlargement, new manufacturers, personal app site visitors and profitability: JUBI administration referred to as out acceleration in Domino’s retailer additions— it’s concentrating on a minimum of 134 new shops (gross) in FY2022 however the second wave of the pandemic. We count on 150+ internet new shops/12 months thereafter versus the Road’s and our earlier expectations of about 120-125 and 135-140 shops, respectively.

We mannequin greater retailer progress and revise FV to `3,400 (from `3,200): We increase retailer progress, tweak estimates and revise FV to `3,400; `2,950 from Domino’s (50X Jun-23E PE, ex-Ind-AS 116) + possibility worth of `450 from new manufacturers/ investments.

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