Jubilant Foodworks rating – Buy: Resilient showing in face of Covid-19

This autumn noticed 50 additions for Domino’s, with gross provides for FY21 at 134 cf. the sooner steerage of 100. The corporate will look so as to add a minimum of as many in FY22 as effectively.

Jubilant Meals reported an in-line quarter though y-o-y progress seems to be robust aided by a low base. Ebitda grew 47% y-o-y with earnings doubling y-o-y. Focus continued on Domino’s retailer additions with 50 in This autumn and 134 for FY21, forward of the steerage. Enter worth inflation (primarily cheese) confirmed up barely on GMs though administration expects to carry on to margins in coming quarters via self-help measures. We barely tweak estimates and retain Purchase with TP of Rs 3,700.

In-line revenues: This autumn revenues grew 14% y-o-y, off a low base, according to our estimate. On a 2-yr cagr foundation, progress improved to 9% vs. 7% in Q3. Reported SSS progress stood at 11.8% (15% adj. for retailer closure).

Channel developments: Supply grew c.29% y-o-y, whereas takeaway grew 77%, which was an enchancment from Q3 ranges however off a low base. Personal app witnessed stronger progress vs. aggregators. Dine-in restoration sequentially continued in This autumn, with income decline at c.36% vs. c.58% in Q3.

GM decline q-o-q: GM declined 80bps q-o-q to 77.5% (up 3ppt y-o-y), barely beneath estimate as a result of cheese worth inflation. Mgmt nonetheless stays assured of sustaining margins in coming quarters.

In-line margins: Ebitda margin was barely above, led by higher value administration & op. leverage positive aspects. Worker prices grew solely 2% y-o-y, whereas different bills grew 15% y-o-y. Resultant Ebitda margin expanded 5.4ppt y-o-y to 24.3%. Ebitda grew 47% y-o-y to Rs 2.5 bn, according to estimates (2-yr Cagr at 30%).

EPS progress: Earnings progress was additional aided by lower-than-expected depreciation (-6% y-o-y). Pre-ex EPS grew 132% y-o-y to c.Rs 1 bn, 12% above estimate.

Second wave: JUBI’s revenues have been way more resilient within the second wave. For instance, in opposition to April-19, April-21 revenues had been down c.6% (vs. >75% decline final 12 months). Influence was barely larger in Could with c.13% decline over Could-19 (-60% final 12 months). Supply progress was robust at 37% in April and 56% in Could over 2019 ranges.

Retailer additions: This autumn noticed 50 additions for Domino’s, with gross provides for FY21 at 134 cf. the sooner steerage of 100. The corporate will look so as to add a minimum of as many in FY22 as effectively.

Past pizza: Hong’s Kitchen and Ekdum! continued wholesome progress in This autumn and revenues for Hong’s have returned to pre-Covid ranges. Administration is optimistic of the expansion prospects for Popeyes. Hen is a Rs 40-bn market rising in double digits in the previous few years. JUBI will open the primary Popeye retailer in FY22. No plans to extend stake in DP Eurasia.

New hires: JUBI has tweaked the management construction with the elevation of ex-COO Rajneet Kohli as Chief Enterprise Officer for Domino’s, ex-VP Operations Amit Maheshwari because the Head of operations. Ashish Goenka has joined as CFO from Bharti Airtel. Gaurav Pande of HUL has joined to move Popeyes. VP Provide chain Avinash Kant will likely be driving initiatives for an built-in provide chain.

Preserve Purchase: JUBI stays resilient on progress in addition to margins however Covid 2.0. We barely tweak the FY22-23 estimates by 1-2% and roll over to Jun-23. Preserve Purchase with a revised PT of Rs 3,700 primarily based on 67x Jun-23 (Rs 3,050 earlier).