Report
Krishnan Sambamoorthy
EUR 120.00 For Business Accounts Only

MOSL: JUBILANT FOODWORKS (Upgrade to Buy)-COVID improves structural outlook, right-to-win strengthening

JUBILANT FOODWORKS: COVID improves structural outlook, right-to-win strengthening; Upgrade to Buy

(JUBI IN, Mkt Cap USD5.4b, CMP INR3063, TP INR3630, 19% Upside, Upgrade to Buy) 

  • While Jubilant FoodWorks (JUBI)'s sales were broadly in line with our expectations, margins surprised positively.
  • The management believes the QSR business in India is at a significant inflection point. In line with this, the company has not only increased its store expansion guidance (150-175 stores from 135 earlier) but also announced investments to boost the supply chain. Moreover, in an interesting new thrust, it has shown intent to gradually become a food tech company. On the technology front, JUBI is significantly expanding its customer experience, analytics, and product innovation teams. The personalization of purchases and identifying triggers for buying in various customer segments would be important growth areas.
  • These welcome initiatives are strengthening JUBI's right-to-win in a rapidly expanding QSR market - wherein the post-pandemic medium-to-long term opportunity is looking significantly superior to pre-pandemic levels. In addition to its robust delivery moat, the company has also added value and technology moats (which are now strengthening further). This gives it a sharper edge over QSR peers and aggregators. It is already the most efficient on sales per sq. ft. basis, leading to best-of-breed profitability as well as the best balance sheet metrics among peers.
  • Given the structural opportunities in the QSR space and JUBI's dominant positioning with proven and profitable model, we expect JUBI to be the key beneficiary of favorable trends (shift towards branded players). Thus, we upgrade the rating to Buy with TP of INR3,630 (60x Sep’23 EPS).
Underlying
Jubilant Foodworks

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.

Provider
Motilal Oswal
Motilal Oswal

​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.

Analysts
Krishnan Sambamoorthy

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