MOSL: JUBILANT FOODWORKS (Neutral)-High base effect coming into play-Incremental earnings growth under pressure
Jubilant Foodworks: High base effect coming into play; Incremental earnings growth under pressure from a multitude of factors
(JUBI IN, Mkt Cap USD2.3b, CMP INR1243, TP INR1325, 7% Upside, Neutral)
Sales increased 10.9% YoY to INR8.65b (our estimate: INR8.61b) in 4QFY19, with same-store sales (SSS) growth coming in at 6% YoY (our estimate: 8%) off a high base (+26.5% in the year-ago period). Total Domino’s store count stood at 1,227, with net addition of 27 stores (opened 30, closed 3) in the quarter. EBITDA grew 15.5% YoY to INR1.5b (our estimate: INR1.5b). Adj. PAT was up 16.3% to INR792m (our estimate: INR791m).
- Gross margin expanded 180bp YoY to 76.1%. Higher other expenses (+70bp YoY) and staff cost (+130bp YoY) were partially offset by lower rent costs (-90bp YoY), leading to EBITDA margin expansion of 70bp YoY to 17.1%.
- FY19 performance: Sales, EBITDA and adj. PAT grew 18.5%, 36.2% and 58.9%, respectively. Gross/EBITDA margin expanded 40bp/220bp YoY to 75.2%/17.2%.
- Concall highlights: (1) Low SSSG in the quarter was attributed to (a) 26% SSSG in the base quarter, (b) opening of 50% of new stores close to the existing outlets (which improved service but impacted SSSG) and (c) evident slowdown in dine-in. (2) JUBI intends to use the price increase lever sometime in FY20 after over two years.
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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