MOSL: JUBILANT FOODWORKS (Neutral)-SSG beat in 1QFY19, but base challenging for 2HFY19
Jubilant Foodworks: SSG beat in 1QFY19, but base challenging for 2HFY19; Maintain Neutral
(JUBI IN, Mkt Cap USD2.7b, CMP INR1401, TP INR1320, 6% Downside, Neutral)
- Jubilant Foodworks (JUBI) reported 26% sales growth YoY to INR8.6b, with SSS growth of 25.9% YoY (est. of +18%). Total store count stood at 1,144, with net 10 Domino’s stores being added in 1QFY19.
- Gross margin contracted 180bp YoY to 74.5%, while EBITDA margin expanded 490bp YoY to 16.6%, led by a sharp decline in staff costs (-360bp YoY to 18.1% of sales), rent (-180bp YoY to 9.8%) and other expenses (-130bp YoY to 30%).
- EBITDA grew 78.5% YoY to INR1.4b (est. of INR1.3m). Lower depreciation and higher other income meant that adj. PAT growth (+213.2% YoY to INR747m v/s est. of INR542m) was much higher than EBITDA growth.
- Concall highlights: (1) Added 10 Domino’s stores in 1Q, but maintained the target of 75 stores for full year. Store addition likely to accelerate from 2QFY19. (2) New stores typically tend to open at 75-80% of system average and payback is around 2.5-3 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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