MOSL: JUBILANT FOODWORKS (Sell)-SSSG better than expectation- ‘Everyday Value’ strategy receives good response
​Jubilant Foodworks: SSSG better than expectation; ‘Everyday Value’ strategy receives good response
(JUBI IN, Mkt Cap USD1.0b, CMP INR1275, TP INR850, 33% Downside, Sell)
- Results above expectations: 1QFY18 net sales grew 11.5% YoY (est. of +3%) to INR6.8b, EBITDA rose 37.8% YoY (est. of +3%) to INR796m and adj. PAT increased 25.6% YoY (est. of -4.8%) to INR181m. SSS grew 6.5% YoY (est. of -3%) for the quarter.
- Gross margin shrunk 40bp YoY to 76.4% (est. of -200bp). Lower staff costs (-130bp to 21.7%), other expenses (-120bp to 31.3%) and rent costs (-20bp to 11.6%) led to EBITDA margin expansion of 220bp YoY to 11.7% (est. of flat margin).
- Concall highlights: (1) SSSG of 6.5% in 1QFY18 was led by growth in business volumes, mostly due to good response to 'Everyday Value' strategy for Domino's Pizza. (2) Benefits of cost rationalization efforts in association with AT Kearney will be witnessed mainly in 3QFY18 and 4QFY18. (3) 255bp negative impact due to Dunkin Donuts on margins in 1QFY17 came down to 145bp in 1QFY18.
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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