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Same‐store sales (SSS) growth of 33%: Jubilant FoodWorks (JUBI) reported Q4
sales, EBITDA and PAT of Rs1.94bn, Rs331m and Rs193m as against our
expectations of Rs2.02bn, Rs368m and Rs231m, respectively. SSS growth of
33.2% surprised us positively as it comes on the back of higher base of 38% in
Q4FY10. This was aided by cricket world cup in Feb‐March 2011.During the
quarter, JUBI opened 14 new stores, taking the total store count to 378. For
FY11, 70 new owned stores were opened in‐line with the guidance. Seeing the
robust demand momentum, management has upped the guidance for store
openings to 80 for FY12e.
Operating margins up 160bps YoY: Inflationary pressures in key RM
constituents did not impact gross margins significantly (down 50bps YoY).
However, employee costs remained firm and presents a challenge, going
forward, given the high attrition prevalent at store level and base of 11500
employees. Beneficial impact of strong SSS growth was visible in the operating
leverage as rental and other expenses declined 120bps and 150bps,
respectively. Consequently, operating margins were up 160bps YoY.
Rich valuations limit near term upside: Strong SSS growth of 37% in FY11 on the
back of 22% growth in FY10 indicates a robust demand momentum in the Indian
QSR space. Current quarter once again demonstrates the inherent superiority of
JUBI’s business model. Negative working capital, high capital efficiency ratios
and healthy cash generation is the consequence of JUBI’s strong market
positioning and robust brand equity. However, after outperforming the markets
by 110%/25%/45 in the last 12/6/3 months and at 31.6 times FY13e, we believe
the stock price reflects all the positives and hence, has limited upside in the near
term, despite our long‐term bullish stance on JUBI. Hence, we maintain our
‘Accumulate’ rating, with a revised target price of Rs700.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Same‐store sales (SSS) growth of 33%: Jubilant FoodWorks (JUBI) reported Q4
sales, EBITDA and PAT of Rs1.94bn, Rs331m and Rs193m as against our
expectations of Rs2.02bn, Rs368m and Rs231m, respectively. SSS growth of
33.2% surprised us positively as it comes on the back of higher base of 38% in
Q4FY10. This was aided by cricket world cup in Feb‐March 2011.During the
quarter, JUBI opened 14 new stores, taking the total store count to 378. For
FY11, 70 new owned stores were opened in‐line with the guidance. Seeing the
robust demand momentum, management has upped the guidance for store
openings to 80 for FY12e.
Operating margins up 160bps YoY: Inflationary pressures in key RM
constituents did not impact gross margins significantly (down 50bps YoY).
However, employee costs remained firm and presents a challenge, going
forward, given the high attrition prevalent at store level and base of 11500
employees. Beneficial impact of strong SSS growth was visible in the operating
leverage as rental and other expenses declined 120bps and 150bps,
respectively. Consequently, operating margins were up 160bps YoY.
Rich valuations limit near term upside: Strong SSS growth of 37% in FY11 on the
back of 22% growth in FY10 indicates a robust demand momentum in the Indian
QSR space. Current quarter once again demonstrates the inherent superiority of
JUBI’s business model. Negative working capital, high capital efficiency ratios
and healthy cash generation is the consequence of JUBI’s strong market
positioning and robust brand equity. However, after outperforming the markets
by 110%/25%/45 in the last 12/6/3 months and at 31.6 times FY13e, we believe
the stock price reflects all the positives and hence, has limited upside in the near
term, despite our long‐term bullish stance on JUBI. Hence, we maintain our
‘Accumulate’ rating, with a revised target price of Rs700.
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