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Date : January 07, 2012
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Best Buy :JUBILANT FOODWORKS LIMITED
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Price Info :-
| CMP (Rs.) |
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| 52 Week High (Rs.) |
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| 52 Week Low (Rs.) |
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| Market Cap (Rs In Cr) |
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| Face Value |
Rs.10 |
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About The Company:- |
Jubilant FoodWorks Limited is India’s largest and fastest growing food service company, with a network of 364 stores. JFL operates Domino’s Pizza brand with the exclusive rights for India, Nepal, Bangladesh and Sri Lanka. The Company is the market leader in the organized pizza market with a 50% market share and 70% share in the Pizza home delivery segment in India.
The Company has now also strengthened its portfolio by entering into an agreement with Dunkin’ Donuts Franchising LLC, for developing the Dunkin’ Donuts brand and operating restaurants in India.
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| Key Factor Expansion: |
Also sales will be affected by price hikes, around 8 per cent in the first half of FY12 and another 3 per cent in November 2011 against its policy of 6 per cent per annum hikes. Same-store sales growth is the mainstay for the company’s future business expansion and growth of its new venture Dunkin’ Donuts (80-100 stores in the next five years).
The company had targeted to open 80 stores in FY12, and is confident of its store expansion target. So far, it has opened 33 stores in the first half. Another 29 stores are expected to be opened in the current quarter. While the target looks achievable, investors should keenly watch out for any slippage thanks to the slowdown.
The company’s margins, which are close to its peak, are exposed to downside risk due to several factors. High food inflation, especially in milk products like cheese, can increase costs. The benefits of operating leverage seem to be reducing -- staff costs and other expenditure as a percentage of sales had a high correlation to same-store sales growth in Q2. The company is also increasing advertising expenditure to counter the slowdown. Moreover, the preoperative expenses of Dunkin’ Donuts and tax outgo can also hurt profitability.
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| Financial & Valuation: |
Jubilant Foodworks today posted net profit for the second quarter ended September, 2011, at Rs 23.70 crore, an increase of 28% from Rs 18.50 crore in the corresponding quarter a year ago, The total income for the quarter increased 48% to Rs 242 crore from Rs 164 crore in the same quarter last fiscal.
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Our Recommendation:
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We therefore maintain our “BUY” call on the stock with a target price of Rs.805 level for JUBILANT FOODWORKS LIMITED., from medium term perspective.
Thanks and Regards,
Mideast Team
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