Jubilant Foodworks Ltd. share price target

JFL is a strong player in the QSR industry, with >1,100 stores. Therefore, it commands a high valuation, despite its uninspiring performance in the past. We expect JFL's performance to improve in ensuing quarters. We upgrade the rating to BUY from NEUTRAL, with a TP of Rs 1,405 based on 45x June-19EPS. JFLs net revenue was up 11.5% YoY at Rs 6.8bn, higher than our expectation of 7%. EBITDA and PAT increased by 38% and 26% YoY, respectively. JFLs strong 1QFY18 performance has delivered on time after stock was under pressure on consistent weak performances. SSG at 6.5% (our expectation 3%) was much better than -7.5/-3.2% in 4QFY17/ 1QFY17 respectively. QSR industry growth was muted, but JFLs mgt is confident of sustaining healthy SSG, going ahead.

Refer to important disclosures at the end of this report Every Day Value strategy paying rich dividends; Upgrade to Accumulate Jubilant FoodWorks had a strong quarter, with revenue at Rs6.8bn, up 11.5% yoy; EBITDA at Rs796mn, up 37.8% yoy; APAT at Rs239mn grew by 25.5% yoy, impacted by higher depreciation of Rs462mn (which includes Rs90mn of store closure expenditure) SSG at +6.5% was aided by healthy traction in Every Day Value offers. Every Day Value offers helped increased frequency of existing customers and induced influx of new...

After a disastrous performance in 4QFY17, Jubilant FoodWorks (JFL) has reported a strong set of numbers for the quarter ended June 30, 2017, ahead of our estimates. While net revenues grew by 11.5% YoY to Rs6.8bn (estimate of Rs6.4bn), Net profit surged by 25.5% YoY to Rs238mn...

Lower than estimates:Sales declined 1%on 7.5% decline in SSSg, as delivery was impacted in Jan/Feb due to demonetization. Gross margin improved 35 bps YoY to 76.8% but negative operating leverage led to 15% decline in EBITDA.

Jubilant 2.0 Execution Remains a Concern; Downgrade to REDUCE Jubilant FoodWorks (JFL) has posted a disappointing performance across all operational parameters in 4QFY17. Net sales fell by 0.9% YoY to Rs6.1bn, while EBITDA declined by 15.1% YoY to Rs605mn. Reported net profit fell from Rs278mn to Rs67mn on yoy basis, although the decline is also attributable to exceptional expense of Rs122mn in the quarter, apart from poor...

Revenue decreased by 6.98% to Rs. 612.78 Cr in Q4FY17 when compared to the previous quarter.

Turning around a retailer that has been slipping for some time could be a challenging task.(i) dramatically lower the pace of store expansion, (ii) scale down Dunkin' Donuts

Q3FY17 sales grew 4% while EBITDA and PAT declined 12% and 32%. Same Store Sales (SSS) declined 3.3% with cash-on-delivery orders getting impacted due to demonetization. Gross margin declined 200 bps YoY to 75%. EBITDA margin declined 180 bps to 9.7%.

Revenue fell by 1.0% to Rs. 658.76 Cr in Q3FY17 when compared to the previous quarter. On the other hand, it increased by 3.94% when compared with Q3FY16.

JFLs net revenues were up by 3.9% YoY to Rs 6.6bn, in line with our estimates of 3.5%. EBITDA & PAT declined by 16% & 37% YoY, respectively. Demonetisation has impacted JFL?s performance adversely and SSG stood at -3.3% vs. expectations of -4%. As delivery orders comprise 50% of JFL revenues, this resulted in increased pressure owing to demonetisation vis-?-vis its peers (McDonald?s SSG was 5%).