Jubilant FoodWorks Surprise Package, ACCUMULATE :Emkay

Visit http://indiaer.blogspot.com/ for complete details �� ��

Jubilant FoodWorks

Surprise Package, Maintain ACCUMULATE

ACCUMULATE

CMP: Rs 552                                       Target Price: Rs 600

---

n     Jubilant FoodWorks (JFL) stellar performance continues – revenue growth of 67.1% yoy to Rs1633 mn and  adjusted net profit growth  doubled to Rs184 mn

n     3rd consecutive quarter of positive surprise - same store sales growth at 43% yoy – demand buoyancy and acceptance of new SKU (Pasta, Wraps & Deserts) are key contributors

n     Revised our assumptions on same store sales growth from 16% to 25% in FY11E

n     Upgrade earnings by 12% (Rs11.3/Share) and 27% (Rs15.4/Share) for FY11E and FY12E -Maintain ‘ACCUMULATE’ rating and revised price target to Rs600/Share

Stellar performance continues- reports APAT of Rs184 mn – 17% ahead

of expectation

Stellar performance of JFL continues, supported by healthy same store sales growth of

43% and addition of 18 new stores in the quarter. Key highlights are (1) 67.1% yoy

growth in revenues to Rs1633 mn (2) Ebidta growth at 95.3% yoy to Rs297 mn and (3)

APAT growth of 137.5% yoy to Rs184 mn. Ebidta margins expanded by 260 bps yoy to

18.2% - gaining from operating leverage in the business.

Same store sales growth continues to surprise - recorded 43% growth in

Q2FY11

Same store sales growth continues positive surprises – 3rd consecutive quarter of

strong growth. Same store sales growth stood at 43% in Q2FY11 – versus 37% in

Q1FY11 and 38% in Q4FY10. Demand buoyancy and acceptance of new SKU ‘s like

Mexican Wrap, Choco Lava Cake and Pasta are contributors to same store sales

growth. Considering H1FY11 performance, we have revised our same store-sales

growth assumptions from 16% to 25% in FY11E.

Testing incremental avenues to augment growth – franchisee route at

airports and Sri Lanka operations

JFL is straddling for geographic expansion and new distribution formats for growth.

Consequently, JFL has 2 franchisee stores opened in last 2 quarters at Delhi and

Mumbai airport. Further, JFL presence in Sri Lanka will further strengthen with

expansion from 5 stores to 7 stores in FY11E.

18 new stores in Q2FY11 with total store tally of 320 Nos and presence in

79 cities

JFL added 18 new stores in Q2FY11 versus 14 new stores in Q1FY11. JFL continues to

expand store network - 24 in Q1FY10, 15 in Q2FY10, 16 in Q3FY10, 10 in Q4FY10 and

14 in Q1FY11. In addition, JFL has increased its reach from 56 cities in Q1FY10 to 79

cities in Q2FY11. JFL has reiterated its expansion plans- add 65-70 stores in FY11E.