MOSL: JUBILANT FOODWORKS (Buy)-SSS growth in line, margin outlook positive
Jubilant FoodWorks: SSS growth in line, margin outlook positive
(JUBI IN, Mkt Cap USD3.2b, CMP INR1745, TP INR2020, 16% Upside, Buy)
- JUBI's 3QFY20 sales were in line with SSS growth at 5.9% YoY (v/s est. 6%).
- The company has done well to report mid-single digit SSS growth in the past 4 quarters despite very high base of 15-26% SSS growth, competition from aggregators and slowdown in dine-in.
- Healthy demand environment, favorable base of 4-6% SSSG in the next 4 quarters and incrementally benign outlook on operating costs augur well for >25% earnings growth over the next two years, supporting our Buy rating.
Sales and SSSG in line, marginally lower than anticipated EBITDA
- JUBI reported 14.1% sales growth YoY to INR10.6b (v/s est. INR10.4b). SSS growth was 5.9% YoY (v/s est. 6%); like-to-like growth (i.e. sales growth of stores that were not split since 1st Apr'18) stood at 7.2%.
- EBITDA grew 48.6% YoY to INR2.5b (v/s est. INR2.6b), mainly due to Ind-AS 116 impact YoY.
- PBT declined 5.6% YoY to INR1.4b (v/s est. INR1.5b) while Adj. PAT was up 7.4% YoY to INR1b (v/s est. INR1.1b).
- Without the impact of Ind-AS 116, underlying EBITDA was up 3.3% YoY to INR1.8b with EBITDA margin at 16.6%.
- Gross margin was down 60bp YoY to 74.9% due to high RM inflation, led by dairy and vegetables.
- EBITDA margin expanded 560bp to 23.9%, largely due to Ind-AS 116. Underlying EBITDA margin contracted 170bp to 16.6%.
- For 9MFY20, sales/EBITDA/PAT growth stood at 12.1%/53.8%/7.3% YoY.
Jubilant FoodWorks Limited is a food service company. The Company operates through Food and Beverages segment. The Company and its subsidiary have rights to develop and operate Domino's Pizza brand in India, Sri Lanka, Bangladesh and Nepal. It operates in India and Sri Lanka. It has a right for developing and operating Dunkin' Donuts restaurants for India. Domino's Pizza India operates approximately 1040 restaurants in India located in states and union territories, covering approximately 240 cities across the country. Dunkin' Donuts sells a range of donuts and over a dozen coffee beverages, as well as an array of bagels, breakfast sandwiches and other baked goods. The Company has approximately 70 Dunkin' Donuts restaurants in India. It offers Chocolate Donut, Break-up Party Eclair, Chocofix Donuts, Big Joy Burger, Naughty Lucy Burger, The Tough Guy Burger, Too Much Burgers range, Wicked Wraps, the iconic Dunkin' Original Drip Coffee, Dunkaccinos and Spiked Iced Tea, among others.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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