Jubilant Foodworks Complete Fundamental Analysis and Future Outlook
Jubilant Foodworks operates the popular fast food outlets named Domino’s Pizza, Dunkin Donuts and Hong’s Kitchen in India. The company has established a robust supply chain with 3 distribution hubs and 29000+ employees.
- The Domino’s pizza brand has 1325 restaurants and enjoys top of the mind recall across the youth population especially in urban and semi-urban areas.
- The company is also expanding its presence in Sri Lanka where they have 22 restaurants and in Bangladesh where they currently operate 3 restaurants.
- The business model is driven by operational excellence and best-in-class delivery. The company was able to achieve a ROCE of 40% in FY2019 which is amongst the highest in the Industry.
- Jubilant Foodworks has a differentiated brand USP of ’30 minutes or free’ delivery guaranteed. They have also been successful in striking an emotional chord with consumers through campaigns such as ‘Hungry Kya?’, ‘Yeh Hai Rishton Ka Time’ and the latest one, ‘Khushiyon ki Delivery Kabhi Bhi Kahin Bhi’.
- Domino’s Pizza India has now become the brand’s largest market outside of the U.S. The company competes with other major players like Pizza Hut, Smokin’ Joe’s etc, but has a loyal customer base of it own.
I have evaluated the company on 10 fundamental categories and each has been given a rating out of 5 stars. From this, I have arrived at a combined stock rating for the company.
This is the summary of the analysis.You can read the detailed analysis and ratings on the source link to my blog.
Source: Jubilant Foodworks Fundamental Analysis and Future Outlook
This is a 5-star stock which means it is a very good investment opportunity.
Some insights for the coming years from management discussion & analysis (MD&A) and con calls are as follows.
- The company opened 47 new restaurants in the third quarter of FY 2019 which was the highest in the last 20 quarters which shows management’s confidence in the medium-term growth
- Due to the COVID-19 lockdown, the restaurants are closed for business, this will have a negative impact on revenue in the short term. The company, however, will see normal operations once the situation stabilizes. The revenue impact is estimated in double digits.
- Jubilant Foodworks has not finalized FY 2021 expansion yet but indicates a strong store opening momentum in FY21 as well
- The dine-in numbers have shrunk but urban areas have seen a big increase in delivery orders leading to healthy SSSG (Same-Store Sales Growth). Further, momentum in delivery has been accelerating in recent quarters.
- There are concerns regarding material cost inflation as the country is in Lockdown and the supply chains are disrupted. But this is only for the short term.
The company shows promising growth opportunities especially in the urban areas which are witnessing increased per capita income and consumption. This will improve the revenue and profitability for the company in the coming years.
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