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Jubilant Foodworks

About the Company

Jubilant FoodWorks Limited is an Indian food service company based in Noida, Uttar Pradesh which holds the master franchise for Domino’s Pizza in India, Nepal, Sri Lanka and Bangladesh, for Popeyes in India, Bangladesh, Nepal and Bhutan, and also for Dunkin’ Donuts in India. The company also operates two homegrown restaurant brands called Ekdum! and Hong’s Kitchen. Jubilant FoodWorks is a part of the Jubilant Bhartia Group, owned by Shyam Sunder Bhartia and Hari Bhartia.

 

Q4FY22 Updates

Financial Results & Highlights

Standalone financials (in Crs)
  Q4FY22 Q4FY21 YoY % Q3FY22 QoQ % FY22 FY21 YoY%
Sales 1170 1037 12.8% 1204 -2.8% 4372 3339 30.9%
PBT 154 137 12.4% 183 -15.8% 589 309 90.6%
PAT 116 104 11.5% 137 -15.3% 437 233 87.6%
Consolidated financials (in Crs)
  Q4FY22 Q4FY21 YoY % Q3FY22 QoQ % FY22 FY21 YoY%
Sales 1188 1051 13.0% 1222 -2.8% 4437 3385 31.1%
PBT 150 138 8.7% 182 -17.6% 581 306 89.9%
PAT 96 105 -8.6% 133 -27.8% 418 230 81.7%

Detailed Results

  1. Consolidated Revenues in Q4 have increased by 13% YoY. FY22 sales have seen an impressive 81% YoY growth.
  2. EBITDA margins stood at 25%.
  3. The company opened 80 new Domino’s stores along with 4 new Popeyes restaurants in Bengaluru & 1 new each for Dunkin’ and Hong’s Kitchen.
  4.  Sales growth In Srilanka & Bangladesh stood at 80.6% & 44.5% respectively.
  5. GPM decreased by 56 Bps to 76.9% while PAT margins stood at 10%
  6. Like-for-like (LFL) growth for the quarter stood at 5.8%.
  7.  The company opened 80 new Domino’s stores opened in Q4FY22 and 230 stores in FY22.
  8. The company had 7.7 Mn app installs in Q4FY22 and 30.2 Mn in FY22.
  9. The Company completed 100% acquisition of its subsidiary with an intention to further strengthen presence and scale of operations in the fast-growing and critical market of Bangladesh.
  10. Online ordering accounted for 97.9% of total sales in Q4 with mobile orders accounting for 97.4%.

 

Investor Conference Call Highlights

  • The Board approved the appointment of Sameer Khetrapal as the Chief Executive Officer and Managing Director.
  • The management states that more than 70% of its orders are now being delivered in under 20 minutes.
  • The management doesn’t expects a reduction in marketing spend in FY23.
  • The management expects to differentiate its Popeyes brand by offering chicken sandwiches.
  • The company expects Popeyes to have atleast 250-300 stores in medium term.
  • The management doesn’t expect a big downside in margins of Dominoes segment for FY23.
    1. The management believes that popeyes stores are oriented more towards dine in based & it expects its profitability in medium term to be similar to Dominoes.
  • The company will have a new expanded commissary in Bangalore, Mumbai, Kolkata, Ahmedabad and ramped up capacity in Mohali between FY23-24.
    1. The management is guiding for opening 250 new dominoes store in the coming FY.
    2. The company took a price hike of about 5% to 6% at a menu price level during the end of Q4 which flew through in quarter 4, and it had also taken another round of price increase towards early April, which was in the similar range.
  • The management states that its branch expansion strategy isn’t margin dilutive & the new store payback is between 2 to 3 years.

 

Analyst’s View

Jubilant Foodworks is the largest QSR player in India with the master franchise of Dominos. It also holds the licenses for Dunkin DOnuts and Popeye’s Chicken. The company has seen impressive recovery post the pandemic and has seen FY22 revenues rise 31% YoY. The company continues to focus on superior delivery times and shrinking operating areas to be able to deliver within 20 mins. The management is also very optimistic on the future of the Popeye’s franchise in India and is building a custom delivery network for this brand. It remains to be seen what issues will the company face in expanding Popeye’s and whether they will be able to compete in terms of delivery times with the other food delivery majors like Swiggy and Zomato. Nonetheless, given the strong market position of the company, the future potential of the QSR sector and the introduction of Popeye’s in India, Jubilant Foodworks is a pivotal QSR and food services stock to watch out for.

 

Q3FY22 Updates

Financial Results & Highlights

Consolidated Financials (In Crs)
Q3FY22 Q3FY21 YoY % Q2FY22 QoQ % 9MFY22 9MFY21 YoY%
Sales 1222 1085 12.6% 1126 8.5% 3249 2334 39.2%
PBT 182 165 10.3% 162 12.3% 431 168 156.5%
PAT 133 124 7.3% 120 10.8% 322 125 157.6%
Standalone financials (In Crs)
Q3FY22 Q3FY21 YoY % Q2FY22 QoQ % 9MFY22 9MFY21 YoY%
Sales 1204 1073 12.2% 1110 8.5% 3201 2302 39.1%
PBT 1831 1661 10.2% 1635 12.0% 4353 1718 153.4%
PAT 1373 1251 9.8% 1215 13.0% 3214 1294 148.4%

Detailed Results

  1. Consolidated Revenues in Q3 have increased by 13% YoY. 9M sales have seen an impressive 39% YoY growth.
  2. When compared to pre-covid, Dominoes system sales recovered by 112.9%. This was attributed to recovery in Delivery and Takeaway channels by 128.0% and 148.2% while dine-in recovered by 71.4%
  3. EBITDA margins stood at 26.6%.
  4. The company opened 75 new Domino’s stores along with the first two Popeyes restaurants in Bengaluru & 1 new restaurant each for Dunkin’ and Hong’s Kitchen. This was the highest number of stores opened ever in a quarter for Jubilant.
  5. Domino’s app downloads during the quarter stood at 8.2 million.
  6. Sales growth In Srilanka & Bangladesh stood at 95.9% & 38% respectively.
  7. Board of directors approved subdivision of equity shares from face value of Rs. 10 each to face value of Rs. 2 each.
  8. GPM decreased by 70 Bps to 77.6% while PAT margins decreased by 30 Bps to 11.5%
  9. Like-for-like (LFL) growth for the quarter stood at 7.5%
  10. The company opened its 1500th store on 31st Jan 2022.
  11. Online ordering accounted for 97.6% of total sales in Q3 with mobile orders accounting for 97.4%.

Investor Conference Call Highlights

  1. The Company acquired 30.75% stake in Hashtag Loyalty Private Limited which operates an online food ordering platform – Thrive – for a consideration of Rs. 222.0 million.
  2. The Company, through its wholly owned subsidiary Jubilant Foodworks Netherlands B.V., further increased its equity stake in DP Eurasia N.V. to 40.29% through a combination of Reverse Book-building process and direct market purchases
  3. The company opened its landmark 1500th restaurant on 31st January, 2022 with total city coverage now standing at 322.
  4. The company from the coming quarters will report LFL( which is same store sales growth of non split stores) instead of SSSG since it believes that it is a better indicator of company’s performance & further the ratio of split stores to the overall new stores opened in the last 7 quarters is 46%.
  5. The management states that it is  looking to carve out areas of existing other stores and open up new stores which will add pressure on mother store revenues and mother store growth in the short term as these new stores play out And, these splits, are done to reduce the delivery times and ensure that it gets closer to its ambition of delivering 20 minutes across the country
  6. The management states that the company’s fortressing strategy is allowing it to shrink delivery areas and reduce drive times as a result of which a significant proportion of delivery orders are now getting delivered in under 20 minutes.
  7. This faster delivery has directly translated into a significant increase in our customer satisfaction or NPS numbers.
  8. The management states that the entire India menu for Popeyes has no MSG and the chicken is antibiotics free. Further Popeyes has built its own in-house delivery fleet, with 100% of use of e-bikes enabling a zero-emission delivery experience
  9. The management stated that Hong’s Kitchen has become one of the largest Chinese peers of QSR chains in the Delhi-NCR region.
  10. The company closed 15 Dominos outlets in Q3.
  11. The company saw relatively lower recovery in the current quarter due to various stores related restrictions like night curfew, 5% lower operational hours, dine-in being capped at 50%.
  12. The company considers any store that is in the delivery area of a mother store and takes away orders and revenue as a split store.
  13. The company was guiding to deliver 150 stores in the current FY however since it has already opened 150 stores by Q3 itself, so it plans to end the year with close to 200 store additions.

Analyst’s View

Jubilant Foodworks is the largest QSR player in India with the master franchise of Dominos. It also holds the licenses for Dunkin DOnuts and Popeye’s Chicken. The company has seen impressive recovery post the pandemic and has seen 9M revenues rise 39% YoY. It has also completed 1500 stores in India and has seen the most stores opened in a quarter ever in Q3. The company continues to focus on superior delivery times and shrinking operating areas to be able to deliver within 20 mins. The management is also very optimistic on the future of the Popeye’s franchise in India and is building a custom delivery network for this brand. It remains to be seen what issues will the company face in expanding Popeye’s and whether they will be able to compete in terms of delivery times with the other food delivery majors like Swiggy and Zomato. Nonetheless, given the strong market position of the company, the future potential of the QSR sector and the introduction of Popeye’s in India, Jubilant Foodworks is a pivotal QSR and food services stock to watch out for.

 

 

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