| Result Analysis: Jubilant Foodworks Ltd. (CMP: Rs.456.60) | Result Update: Q3FY23 |
Jubilant FoodWorks Limited (JFL) is India’s largest food service company and is part of the Jubilant Bhartia Group. The Company holds the exclusive master franchise rights from Domino’s Pizza Inc. to develop and operate the Domino’s Pizza brand in India, Sri Lanka, Bangladesh and Nepal. It is engaged in retail sales of food through strong international and home grown brands addressing different food market segments. International brands include Domino’s Pizza, Dunkin’ Donuts and Popeyes. In India, it has a strong and extensive network of 1,760 Domino’s restaurants across 387 cities. In Sri Lanka and Bangladesh, the Company operates through its 100% owned subsidiary which currently has 47 and 13 restaurants respectively.
| Stock Details | |
| Market Cap. (Cr.) | 30129 |
| Equity (Cr.) | 131.97 |
| Face Value | 2 |
| 52 Wk. high/low | 707 / 441 |
| BSE Code | 533155 |
| NSE Code | JUBLFOOD |
| Book Value (Rs) | 31.35 |
| Sector | Quick Service Restaurant |
| Key Ratios | |
| Debt-equity: | 1.11 |
| ROCE (%): | 20.83 |
| ROE (%): | 24.8 |
| TTM EPS: | 6.39 |
| P/BV: | 14.6 |
| TTM P/E: | 71.46 |
Result Highlights:
- JFL has reported 10% YoY and 2.3% QoQ increase in the Consolidated Revenue to Rs.1,341 cr. majorly due to the increase in orders from Domino’s; while Net profits has decreased significantly with 40% YoY and 39% QoQ decrease to Rs.80 cr. in Q3FY23 back of the rising finance cost and depreciation expense.
- Operating profit has decreased by 10% YoY and 8% on QoQ basis to Rs.286cr. Operating profit margin of the company stood at 21.5%, declined sequentially as well as on YoY basis by 250bps and 480bps respectively due to the increased cost of raw materials and employee expense.
- Finance cost and Depreciation expense of the company has increased significantly by 14% and 29% on YoY basis in the quarter.
- Company has registered 9.9% growth in the delivery channel and registered 9.8% growth in Dine-in and Takeaway channel.
- In the quarter, JFL opened 73 new stores, aggregated to 1,874 stores across all brands and geographies. Company has added 60 new Domino’s stores and expanded to 16 new cities, totaling to 1,760 stores across 387 cities.
- Company launched 20-minute delivery proposition across 20 zones covering 14 cities also introduced Everyday Value – Mix n Match Menu at Rs. 49 each in Dine-in and Launched new range of eight gourmet pizzas – Viva Roma
Financial Performance:
Shareholding Pattern:
Management Commentary:
Commenting on the December results, Mr. Sameer Khetarpal, CEO and MD said, “We reported modest top-line growth as LFL growth for Domino’s was flat. This, along with historic high inflation, resulted in margin compression. We have sharpened our strategy to get growth back in the business. Our renewed priorities include – Customer first, Data and technology forward, Operational excellence and Foundation of people and culture. We are confident that the interplay of these sets of priorities will not only help us navigate current headwinds but will help us capitalize on the immense potential of the food service industry.”
Outlook:
Jubilant FoodWorks has reported below market expected performance in the December’22 quarter with 10% growth in the Revenue and degrowth of 40% in the Net Profit compared to December’21 quarter. Company’s Operating profit margin and Net profit margin has declined by huge 480bps and 500bps YoY in the quarter due to the High inflation and rising interest cost. However, reduction in material cost and increasing discretionary spend would be beneficial for the company over longer term because of the recent decrease in the Inflation. For the nine months of FY23 Jubilant FoodWorks has reported the earnings of Rs.4.92 and we expect the company to close the FY23 at the eEPS of Rs.6.56. Based on the estimated earnings the expected PE of the company is 70x at the current market price.
*LFL: like-for-like
Results:
| Particulars (In Rs. Cr.) | Q3FY23 | Q2FY23 | Q3FY22 | QoQ% | YoY% | 9MFY23 | 9MFY22 | FY22 |
| Revenue from Operations | 1,332 | 1,301 | 1,211 | 2.3% | 10.0% | 3,888 | 3,220 | 4,396 |
| Other Income | 10 | 10 | 11 | -8.3% | -13.8% | 31 | 29 | 41 |
| Total Income | 1,341 | 1,312 | 1,222 | 2.2% | 9.8% | 3,919 | 3,249 | 4,437 |
| Cost of materials consumed | 313 | 293 | 258 | 6.8% | 21.2% | 881 | 680 | 935 |
| Purchase of stock-in trade | 21 | 20 | 17 | 7.4% | 24.6% | 62 | 45 | 59 |
| Changes in inventories | 6 | 2 | 4 | 151% | 36% | 12 | 7 | 4 |
| Employee expense | 247 | 230 | 200 | 7.3% | 23.2% | 684 | 564 | 768 |
| Other Expense | 471 | 450 | 421 | 4.6% | 11.8% | 1,370 | 1,119 | 1,529 |
| EBITDA | 286 | 312 | 319 | -8.1% | -10.2% | 902 | 819 | 1,109 |
| EBITDA Margin (%) | 21.5% | 24.0% | 26.4% | -250 bps | -480 bps | 23.2% | 25.4% | 25.2% |
| Finance Cost | 52 | 50 | 45 | 4.4% | 14.0% | 148 | 130 | 176 |
| Depreciation & Amortisation expense | 133 | 115 | 103 | 15.7% | 28.6% | 354 | 287 | 393 |
| Share of net profit/(loss) of associate | -0.12 | 17 | -2 | -101% | -95% | 5 | 6 | -10 |
| Exceptional Items | – | – | 0.10 | – | – | – | 7 | 7 |
| Profit Before Tax | 111 | 175 | 179 | -36.1% | -37.8% | 435 | 437 | 563 |
| Tax | 31 | 43 | 46 | -27.6% | -32.2% | 111 | 108 | 145 |
| Profit After Tax | 80 | 132 | 133 | -38.9% | -39.7% | 324 | 329 | 418 |
| PAT Margin (%) | 6.0% | 10.1% | 11.0% | -410 bps | -500 bps | 8.3% | 10.2% | 9.5% |
| EPS (in Rs.) | 1.22 | 1.99 | 2.03 | -38.7% | -39.9% | 4.92 | 4.9 | 6.37 |
Source: Company website, EWL Research
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