Jubilant Foodworks (JUBI) has reported above expected result for 2QFY22. Revenue growth was supported by sustained growth momentum in delivery and take-away channels (stood at 136-172% above pre-covid).
Revenue from dine-in channel remained impacted and stood at 47% pre-covid. Small cities outperformed metro and tier 1-cities. On store addition; c. 16% stores added in small cities with c. 3-4 lakh population while bulk of store (46 out of 55) were added in existing geographies, stated IDBI Capital Equity Research.
JUBI aims to add 175 stores during FY22 (added; 75 stores in 1HFY22). Management expects inflationary headwinds to persist. JUBI's expansion in international market (Eurasia and Bangladesh) should be value accretive as it aims to leverage existing strength of Dominos India franchise. Store expansions in Hongs and Ekdum franchise are tracking well.
"We have marginally trimmed our EPS estimates for FY22-23E by 2-3% and introduced FY24E. We value JUBI at 65x FY24EPS. Our revised TP stands at Rs 3,899 (previous TP Rs 3,123) with Hold rating," the broking firm said.
Key highlights and investment rationale
Delivery and takeaway drives topline; store addition on strong footing
Revenue grew 37%YoY (vs -18% YoY in 2QFY21) driven by 26% SSSG. Overall business stood at 82% pre-covid level driven by strong pick-up in takeaway (172% above pre-covid) and delivery (137% above pre-covid). Dine-in continues to lag-behind at 47% pre-covid. JUBI added total 60 stores during 2QFY22; 55 Dominos, 2 Dunkin, 2 Hongs and 1 Ekdum. In international market; revenue from Srilanka grew 88% YoY while for Bangaldesh 33%YoY. JUBI added 3 Dominos stores in SriLanka to 31 store while in Bangladesh JUBI operates 7 Dominos.
Operating profit margin contracted due to cost inflation
Gross margin contracted marginally by 54bp YoY (2nd consecutive decline) to 78% driven by cost inflation. EBITDA margin declined 67bp YoY to 26%. Adjusted PAT grew 60%YoY to Rs 1.2 billion.
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