Jubilant Meals reported an in-line quarter though y-o-y development seems robust aided by a low base. Ebitda grew 47% y-o-y with earnings doubling y-o-y. Focus continued on Domino’s retailer additions with 50 in This autumn and 134 for FY21, forward of the steering. Enter worth inflation (primarily cheese) confirmed up barely on GMs though administration expects to carry on to margins in coming quarters via self-help measures. We barely tweak estimates and retain Purchase with TP of Rs 3,700.
In-line revenues: This autumn revenues grew 14% y-o-y, off a low base, in step with our estimate. On a 2-yr cagr foundation, development improved to 9% vs. 7% in Q3. Reported SSS development stood at 11.8% (15% adj. for retailer closure).
Channel tendencies: Supply grew c.29% y-o-y, whereas takeaway grew 77%, which was an enchancment from Q3 ranges however off a low base. Personal app witnessed stronger development vs. aggregators. Dine-in restoration sequentially continued in This autumn, with income decline at c.36% vs. c.58% in Q3.
GM decline q-o-q: GM declined 80bps q-o-q to 77.5% (up 3ppt y-o-y), barely beneath estimate as a result of cheese worth inflation. Mgmt nevertheless stays assured of sustaining margins in coming quarters.
In-line margins: Ebitda margin was barely above, led by higher value administration & op. leverage positive aspects. Worker prices grew solely 2% y-o-y, whereas different bills grew 15% y-o-y. Resultant Ebitda margin expanded 5.4ppt y-o-y to 24.3%. Ebitda grew 47% y-o-y to Rs 2.5 bn, in step with estimates (2-yr Cagr at 30%).
EPS development: Earnings development was additional aided by lower-than-expected depreciation (-6% y-o-y). Pre-ex EPS grew 132% y-o-y to c.Rs 1 bn, 12% above estimate.
Second wave: JUBI’s revenues have been way more resilient within the second wave. For instance, towards April-19, April-21 revenues had been down c.6% (vs. >75% decline final yr). Impression was barely increased in Might with c.13% decline over Might-19 (-60% final yr). Supply development was robust at 37% in April and 56% in Might over 2019 ranges.
Retailer additions: This autumn noticed 50 additions for Domino’s, with gross provides for FY21 at 134 cf. the sooner steering of 100. The corporate will look so as to add at the least as many in FY22 as nicely.
Past pizza: Hong’s Kitchen and Ekdum! continued wholesome development in This autumn and revenues for Hong’s have returned to pre-Covid ranges. Administration is optimistic of the expansion prospects for Popeyes. Hen is a Rs 40-bn market rising in double digits in the previous few years. JUBI will open the primary Popeye retailer in FY22. No plans to extend stake in DP Eurasia.
New hires: JUBI has tweaked the management construction with the elevation of ex-COO Rajneet Kohli as Chief Enterprise Officer for Domino’s, ex-VP Operations Amit Maheshwari because the Head of operations. Ashish Goenka has joined as CFO from Bharti Airtel. Gaurav Pande of HUL has joined to go Popeyes. VP Provide chain Avinash Kant will likely be driving initiatives for an built-in provide chain.
Keep Purchase: JUBI stays resilient on development in addition to margins however Covid 2.0. We barely tweak the FY22-23 estimates by 1-2% and roll over to Jun-23. Keep Purchase with a revised PT of Rs 3,700 primarily based on 67x Jun-23 (Rs 3,050 earlier).