Jubilant Foodworks - Q3 FY21 result and investor call updates - YES Securities

Narrative shifts to growth from recovery; new growth engines also added

View - Jubilant Foods is one of the few discretionary names which have come back to a full recovery in 3Q and is now set for strong growth for 4Q onwards. In addition to an acceleration in store opening for Domino's and recovery in the dine-in channel with supply constraints going away, it has added new growth engines by entering in large segments like Chinese and biryani. We see the company getting back to its 20% plus earnings growth trajectory and with ROEs again moving up above 35%, premium valuations of 55x FY23 should sustain.

Quarter highlights - Flat revenue yoy at Rs 10.7bn (+31.2% qoq), SSG at -1.7% and LFL -0.2%, GMs improved by 330bps to 78.2%, EBITDA margins up 250bps to 26.2%, PAT up 22% to Rs 1.24bn; delivery +18.5%, takeaway +64%, dine-in down 58%; opened 57 new stores including 50 Domino's (highest ever), highest ever app downloads at 7.4mn; January has seen sales growth of 6% with 19%/73% growth in delivery/takeaway and 43% decline in dine-in, cash flows improved further with cash.

Store footprint potential - Target to open more than 110 Domino's stores in FY21 and further acceleration from FY22 given expectations of strong growth in the QSR space, see long-term potential of more than 3000 stores in India and 150 stores each in Sri Lanka and Bangladesh.

Margin outlook - Some softening in vegetable prices coupled with lower dairy prices helped gross margins, expect to see some hardening in dairy prices going forward; employee costs higher sequentially due to higher order volumes, special COVID incentives and increased strategic headcount in areas like technology.

Shares of Jubilant FoodWorks Ltd was last trading in BSE at Rs.2644.3 as compared to the previous close of Rs. 2698.6. The total number of shares traded during the day was 87924 in over 10115 trades.

The stock hit an intraday high of Rs. 2762 and intraday low of 2597.1. The net turnover during the day was Rs. 235223065.

Source : Equity Bulls

Keywords