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Research
Jubilant FoodWorks - Pizza Mania - Prabhudas Lilladher
Posted On : 2012-02-19 04:11:11( TIMEZONE : IST )
Same-store sales (SSS) grow 30%: Jubilant FoodWorks (JUBI) reported robust performance with Q3FY12 Sales, EBITDA and PAT of Rs2.77bn (up 49 %), Rs524m (up 62% YoY) and Rs295m (up 55% YoY) as against our expectations of Rs2.63bn, Rs467m and Rs269m, respectively. SSS growth of 30%, on the base of 35.7% in Q3FY11, is quiet healthy. During the quarter, JUBI opened 28 new stores, taking the total store count to 439. Management upped the guidance of opening new stores during FY12e from 80 to 85 stores. First Dunkin store will be rolled out in H1CY12, beginning with the metros. JUBI is building the foundation for Dunkin's rollout, with focus on menu designing and back-end work e.g. vendor and supply chain etc. JUBI now covers 100 cities vis-Ã -vis 87 a year ago. It entered newer cities such as Shillong, Kodaikanal, Rohtak & Burdwan.
- Gross margins improve QoQ; op leverage drives 120 bps margin expansion: JUBI's gross margins remained flat YoY; however, expanded 100bps sequentially, reflecting the twin impact of price hikes as well as stable RM prices. Operating leverage is reflected in 160bps and 40bps reduction in staff costs and rentals, respectively. For the 12 months ended Dec'11, JUBI added 2587 employees and ended the quarter at 15,049 employees (QoQ addition of 1510). Part of the addition is temporary in nature; to manage the festive season driven demand.
- Maintain REDUCE on expensive valuations; look for better entry point: Strong same store performance on high base reflects the superiority of JUBI's capitalefficient model. We expect JUBI to continue to benefit from the evolving QSR space, given its brand equity and deeper reach v/s competitors. QSR industry is expected to do well, aided by confluence of favourable income and demographic factors. However, valuations fully capture the positives, in our view and leave limited room for upside/outperformance. At 38x and 298x FY13e and FY14e earnings, risk-reward continues to remain unfavourable in our view. Maintain REDUCE, with a TP of Rs800.
