Jubilant Foodworks - Tasty Bite; Result Update Q3FY15 ::Edelweiss, report

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

Jubilant Foodworks: SSG surprises but doesn't deliver outperformance; expensive on rich expectations. SELL ::Kotak Sec, report

Please Share:: 

SSG surprises but doesn’t deliver outperformance; expensive on rich expectations. SELL. Even as SSG recovery to the positive zone (modest 1.9%) after four quarters of negative SSG did surprise us positively, it failed to reflect in any outperformance at the EBITDA or PAT level, both of which missed estimates. Our estimates broadly remain unchanged; the stock remains expensive at 40X aggressive FY2017E EPS. Rich valuations on aggressive forecasts are a risky combination. We remain SELLers with a revised TP of `1,175 (from `1,100), valuing the stock at 35X December 2016E EPS.

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

Annual Report Analysis - Jubilant FoodWorks :: Edelweiss PDF link

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

Udaan - Buy Jubilant Foodworks Ltd:: Edelweiss

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

Jubilant Foodworks - SSG Weak; Gross Margin And Store Expansion On Track :: Edelweiss

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

Jubilant Foodworks Ltd (JUBI.NS): 1QF14: SSG Disappoints :Morgan Stanley Research

Jubilant Foodworks Ltd (JUBI.NS): 1QF14: SSG Disappoints :Morgan Stanley Research

Quick Comment: JUBI reported SSG of 6.3% for 1QF14, lower than MSe (7-8%), with an EBITDA margin that declined by 140 bps (including impact of Dunkin Donuts). JUBI reported earnings 4% below MSe, largely on account of higher depreciation - investment in commissaries to support store expansion. Following a ~20% cut in consensus earnings YTD, the 1Q results will likely catalyze another round of earnings cut on the stock - we remain EW.

Earnings miss MSe by 4%: JUBI reported revenue, EBITDA and adjusted PAT growth of 26%, 16% and 5% vs. our expectations of 28%, 16% and 10%, respectively. We believe management has revised its SSG guidance to 8-10% for F14 vs. earlier estimate of 'at least' 10% and an EBITDA margin of 16.5% for F14e.

Key Highlights:

1) Revenue growth of 26% with SSG of 6.3% for 1QF14.

2) Opened 26 new stores for the quarter. There are now 602 Domino's stores in 128 cities in India. Management guidance for F14 remains unchanged at 125 stores vs. MSe of 135.

3) The gross margin up by 70bps (vs. MSe -40bps) was the key positive of the result. This margin expansion must be viewed in context of delayed pricing action during the quarter and likely increased promotional activity, we believe. Input costs, led by cheese prices, have likely contributed to this margin expansion. We expect a large part of this gross margin flexibility to be reinvested in catalyzing volume growth hereon.

4) Staff costs increased by 60bps in 1QF14. As of 1QF14, JUBI has 21,070 employees, 7% higher QoQ and 24% YoY.

5) Rent costs increased by 90bps during the quarter to 8.8%. Rent costs continue to rise, due to several factors, including the impact of lease renewals at higher rates and higher rental expenses for Dunkin stores.

Jubilant Foodworks: Management discussion takeaways - Challenging demand environment : JPMorgan

Our recent discussions with mgmt indicate that weak macro environment is
challenging discretionary spending and the company has to resort to higher
promotions to drive growth. SSS growth trends remain fairly subdued for now,
though mgmt is hopeful of 2H recovery. Margins face downside risk from slowing
SSSG, higher promotions, lower profitability of new stores and costs related to
Dunkin’ Donuts format. Promoter shareholding has come down by 330 bps since
Jan’13 in the company. Valuations at 43x FY14E and 33x FY15E P/E appear
demanding against the backdrop of earnings downside risk. Stay UW.

Jubilant Foodworks- Earnings growth at risk; Stay UW; JPMorgan

Despite significant underperformance witnessed by JUBI YTD (-15% returns),
we don't find the valuations (at 40x FY14E P/E) still pricing in downside risks to
earnings in backdrop of challenging macro. Uncertainty on discretionary demand
remains and we believe signs of more sustainable improvement here would be key
catalyst for stocks to reverse the underperformance. We pare our EPS estimates of
FY14/15E by 10-12% led by assumptions of moderate SSSG and lower margins.
Our earnings are 8-10% below consensus estimates. Promoter shareholding has
come down by 330bps since Jan’12 in the company.
 Lower SSS growth likely in FY14. Given the weakness in discretionary
spends (esp in urban areas), we expect SSSG to moderate from ~17% in FY13
to 12% in FY14 with more severe moderation in 1H. Recent bill value increase
by ~4-5% to pass on service tax incidence may further weigh on frequency/mix
of consumption. We note that Yum India (operates Pizza Hut and KFC)
recently reported -3% SSSG during Q113. More aggression by competition also
does not bode well for comps, in our view. Yum Brands’ Pizza Hut added 58
stores since Jan’12 (with higher focus on delivery format) and its network has
now expanded to ~60 cities (vs 118 for JUBI).
 Margin weakness remains a valid concern. Slowing SSSG, higher
promotions, lower initial profitability of new stores and losses related to Dunkin
format pose key downside risks to margin growth, in our view. We build in
30bps decline in EBITDA margins for FY14E.
 Aggressive store expansion – limited benefits likely given higher incidence
of cannibalisation and likely drag on profitability. While higher store
additions could be a positive surprise in FY14, it could also pose downside risk
to SSSG/margins, in our view. We believe JUBI will likely keep 110-120 stores
as a minimum threshold for new store addition over the next 2-3 years. However
such aggressive store addition (~50% of new stores being in top 10 cities) could
weigh on SSSG comps (in cities where the incidence of store split is higher
SSSG has suffered more) and margins (lower profitability of new stores in initial
years), in our view.
 Reducing earnings estimates and target price. We reduce FY14/15E EPS
estimates by 10/12% driven by lower SSSG assumptions and decline in margins
in FY14 (vs expansion built in earlier). We also roll forward our TP timeframe
to Mar’14 but reduce our target P/E multiple to 28x (vs 30x earlier) to account
for moderating earnings growth. As a result our new Mar’14 TP is Rs1025

Sizzling Stocks: Jubilant FoodWorks, Lanco Infratech ::Business Line

Jubilant Foodworks::Core holding in India consumption basket :: Nomura research,

Core holding in India consumption basket
Moderating returns, but still an
attractive franchise to own

Jubilant Foodworks Ltd. Impressive performance continues…: IDBI capital,

Jubilant Foodworks Ltd. (JUBI) delivered another strong quarter on top line/bottom line with 45%/40% growth YoY respectively to Rs3.1 bn/Rs323 mn – ahead of estimates of Rs2.9 bn/Rs308 mn. Gross margin/EBITDA margin was marginally lower at 73.4%/18.2% impacted by continued food inflation and operationalising of DD stores. We raise our revenue estimates by 1%/4% for FY13/14 (mgmt has raised its store opening target to 100 in FY13 vs. 90 earlier), however, cut our EPS estimates by 5%/4%, to factor in 70bps cut in margin to factor in impact of DD stores (mgmt has guided for 60-70bps margin impact on operationalising of DD stores). We factor in SSG of 20%/18% for FY13/14 with store addition of 100/95. We remain impressed by management’s positive tone on healthy SSG trend (it has guided for >=18% SSG in FY13) and its ability to maintain profitability despite rising competition (led by pricing power and operating leverage – mgt has guided to at least match FY12 EBITDA margin of 18.7% without considering DD stores impact on margin). Maintain ACCUMULATE with DCF valuation of Rs1,260 (13.1% WACC; 5% terminal growth).

Sizzling Stocks: Adani Enterprises, Jubilant FoodWorks :: Business Line

Jubilant Foodworks Ltd: Q4FY12 Result Update :GEPL

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

Summary

We increase our target price on the stock to Rs885 per share in view of the management revising its store additions in FY13E to 90 from the earlier 85. The new store addition guidance should result in a higher than estimated EPS.

However, the valuations appear rich given: 

• The recent run up in the stock over the last six months, 
• Lower SSS growth expectations in the future, 
• Lower average sales per store, and
• Lower scope of margin improvement. 

Consequently we revise our rating to SELL with a target price of Rs885 per share.

click here to view report

  

  

52-WEEK BLOCKBUSTER: JUBILANT FOODWORKS ::Business Line

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

Jubilant Foodworks Ltd :Revised rating - Sell (PDF link)

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

Summary

click to view report

We increase our target price on the stock to Rs802 per share in view of the management revising its store additions in FY12E to 85 from the earlier 80. The new store guidance should result in a higher than estimated EPS.

However, given the recent run up in the stock over the last one month, the valuations appear rich at a P/E multiple of 64.6x and 47.0x our revised FY12E and FY13E EPS respectively. Consequently we revise our rating to SELL from an initial Reduce with a target price of Rs802 per share.

Jubilant Foodworks :: JP Morgan India Investor Tour

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Jubilant Foodworks
Demand Trends, SSS growth and store expansion: Management highlighted that
demand trends for them remain fairly healthy. While early signs of downturn are
visible; management has not seen any significant impact on volume offtake yet at the
stores. Management remains confident to end year with 20%+ Same Store sales
growth in FY12. This fiscal extent of price increases has been higher than the past
and high single digit price growth contributed to SSS growth rates in 1HFY12.
Commitment of Dominos remains quite strong for expansion into India and they
believe there is opportunity to add 70-80 stores per year over medium term.
Margins: Milk led inflation (rising cheese prices) is a key concern for gross
margins. They intend to keep COGS at 25-26% of sales. Management guided that
they should be able to maintain atleast FY11 margins (17.7% EBITDA margins in
FY11). Over medium term operating margins will likely benefit from increasing ratio
of old store to new stores and SG&A leverage.
Dunkin Donuts: Management is quite optimistic about success of Dunkin Donuts
business in India. Consumer trials are underway and management expects to launch
their first store in 1HCY12. Pricing strategy for this format is being firmed up

Buy Jubilant Foodworks : Nomura Research

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

Commentary during the conference call surrounded the 'slowdown' in SSSG to 27% in Q2FY12. While this number was lower than what the company has been delivering in the past 6-7 quarters, this was primarily on the back of tough comps from last year. Also it still represents a solid underlying performance with consumer offtake continuing to remain strong. Margin pressures should start to ease into H2FY12, which should help the company deliver another year of robust earnings growth. Maintain Buy.

Jubilant Foodworks: Early warning signals visible : Kotak Sec,

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Jubilant Foodworks (JUBI)
Consumer products
Early warning signals visible. While JUBI reported 47% sales growth, same-store
growth (SSG) of 27% was below estimates. Most important, the SSG volumes are
<20%, in our view (possibly due to ~10% price increase yoy for an already expensive
product—average price of a pizza is ~Rs200 and average bill value is >Rs300, in our
view). It is likely deviating from its policy of limiting price increases to ~6% p.a. as it
looks to protect gross margins (GM). Despite price hikes, GM declined 160 bps yoy.
Growth in rent in line with sales growth likely indicates slower-than-expected ramp-up
of newer stores, in our view. JUBI is planning to increase marketing spends to address
any potential impact of demand slowdown. SELL. Our DCF-based TP remains Rs750.

Reduce Jubilant FoodWorks - TP: Rs800 Q2FY12 Result Update -- Prabhudas Lilladher

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

Jubilant FoodWorks                     Reduce                     CMP: Rs814                        TP: Rs800

Q2FY12 Result Update - In-line quarter

n  Same-store sales (SSS) growth of 26.7%: Jubilant FoodWorks (JUBI) reported Q2FY12 sales, EBITDA and PAT of Rs2.4bn (up 47 %), Rs436m (up 47% YoY) and Rs237m (up 28% YoY) as against our expectations of Rs2.4bn, Rs447m and Rs247m, respectively. SSS growth of 26.7%, on the base of 43.2% in Q2FY11, is commendable. During the quarter, JUBI opened 19 new stores, taking the total store count to 411. Management maintained the guidance of opening 80 new stores during FY12e. First Dunkin store will be rolled out in H1CY12 beginning with the metros. JUBI is doing the groundwork for Dunkin’s rollout, with focus on menu designing and back-end work e.g. vendor and supply chain etc.

n  Key Con-call takeaways: 1) Very small signals of moderation in consumer demand; pre-emptively trying to boost demand through aggressive promotions 2) Will take one more price increase in November (taken 3 in last 12 months totalling ~10%) 3) SSS volume grew 20%+ in 2Q12; SSS grew even QoQ.

n  Operating leverage cushions the gross margin decline: Operating leverage (140bps decline in other expenses) neutralized the impact of higher input costs which adversely impacted the gross margins by 160bps. Higher input costs is primarily attributed to the inflation in Milk and milk products prices. However, rental and employee costs did not show benefits of high SSS growth as both the cost items remained flat as a percent of sales (employee addition of 2850 YoY)

n  Positives in the price, maintain REDUCE:  Strong same store performance on high base reflects the superiority of Jubilant’s capital efficient model. We expect JUBI to continue to benefit from the strong growth dynamics in QSR space, helped by confluence of favourable income and demographic factors. However, valuations have run-up ahead of fundamentals, in our view. At 48x and 32.8x FY12e and FY13e earnings, risk-reward is unfavourable in our view. Maintain REDUCE, with a  TP of Rs800.

Jubilant FoodWorks :: DIWALI PICKS 2011:: Emkay Eleven

Please Share::  India Equity Research Reports, IPO and Stock News

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

RECO : ACCUMULATE TP : Rs900
Investment Rationale
§ Same-Store-Sales growth was robust at 37% for FY11 and 35% in Q1FY12. In long term, Same-Store-Sales
growth should be 20% (higher then personal care products), equal to median growth
§ JFL has total store network of 387 Nos with presence in 93 cities. There is room to multiply the store network
atleast 2X in next 5 years. Accordingly, we have factored addition of 70 Nos every year for next 5 years,
equivalent to current run-rate
§ Eyeing new growth drivers in QSR segment- deploy excess cash generated from Dominos franchisee and
augment overall growth. JFL is hopeful to launch new brand in next 6-8 months. The same remains un-factored
in our earnings estimates
§ JFL trading at premium valuations - PER of 29.5X FY13E earnings. Valuations to sustain until (1) JFL ventures
into ROE dilutive business proposition and (2) new avenues for investment in QSR or foods service segment in
listed domain
Valuations
§ Remain positive on growth prospects of QSR segment in India and Dominos business model in particular. JFL
should witness robust earnings growth for next 5 years, backed by strong category growth at +20% (higher then
personal care products). We have ACCUMULATE rating with price target of Rs900/Share.

Click for full list and other company details below

DIWALI PICKS 2011:: Emkay Eleven