Sell Jubilant Foodworks - Only 2,000 stores by 2023 - Ambit

Demographic analysis of India's top-400 cities suggests that Domino's has a maximum store count potential of ~950 stores, which is likely to rise to ~1,940 in the next ten years. The growth rate is constrained by the steady rate of evolution of consumption across cities.

Consequently, we forecast the annual new store opening run-rate to range from 125 to 150 over the next decade. Whilst same-store sale growth (SSG) is likely to rise to 14% in FY15 (vs 8% in 4QFY13) as discretionary spends revive, a stock re-rating will be constrained by store splits, rising A&P spends (with rising competitive intensity) and the drag from the expansion of Dunkin Donuts.

Our DCF valuation of Rs. 856/share implies 36.0x FY14 P/E and 28.0x FY15 P/E. We retain our SELL stance.

Source : Equity Bulls

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