Buy Jubilant FoodWorks; target of Rs 625: Motilal Oswal

Moneycontrol • 2 days ago

Original source

Key Investment Pillars

  • Strong Popeyes momentum: Popeyes revenue grew 122% YoY, with LFL growth of 53%, driven by strong customer acceptance and product innovation.
  • Healthy international performance: DP Eurasia revenue grew 13% YoY, with reported EBITDA declining due to monetary gain/loss adjustments under hyperinflation accounting.
  • Margin recovery: Gross margin expanded 110bp YoY to 75.5%, supported by sourcing efficiencies, procurement initiatives, and favorable product mix.
  • Calibrated pricing: The company has taken calibrated price increases of around 140-200bp using machine-learning models, with further pricing actions remaining an option depending on the movement in input costs.

Thesis Validation Checklist

  • LFL growth: Monitor 5-7% LFL growth potential, with a focus on delivery growth and dine-in recovery.
  • Popeyes expansion: Track the expansion of Popeyes, with a target of 250 stores and INR10b brand value over the next 3-4 years.
  • Margin expansion: Watch for EBITDA margin expansion, with a target of 200bp improvement, driven by productivity gains, supply-chain efficiencies, and calibrated pricing.
  • International performance: Monitor the performance of DP Eurasia, with a focus on underlying operating profitability and reported EBITDA margins.