Jubilant FoodWorks Ltd. (JFL) is the market leader in the organized pizza market with a 50% overall market share and 65% share in the home delivery segment in India. JFL with presence across 320 stores pan India operates its stores pursuant to a Master Franchise Agreement with Domino’s Pizza International.
Investment Argument:
The Indian pizza market, estimated at Rs7bn (in FY09), is expected to grow at 35-40% over the next two years to ~Rs17.2bn in FY12E (Source: Food Franchising Report 2009). We consider JFL a play on India’s growing QSR industry. We expect significant benefits of operating leverage setting in with rise in total number of stores. its EBIDTA margins are expected to expand from the current 15.7% in FY10 to 17.7% in FY13E. We forecast 28% CAGR growth in revenues for FY10-FY13E period with total number of stores growing from 306 to 511with increased penetration in Tier II and Tier III cities.
The Indian pizza market, estimated at Rs7bn (in FY09), is expected to grow at 35-40% over the next two years to ~Rs17.2bn in FY12E (Source: Food Franchising Report 2009). We consider JFL a play on India’s growing QSR industry. We expect significant benefits of operating leverage setting in with rise in total number of stores. its EBIDTA margins are expected to expand from the current 15.7% in FY10 to 17.7% in FY13E. We forecast 28% CAGR growth in revenues for FY10-FY13E period with total number of stores growing from 306 to 511with increased penetration in Tier II and Tier III cities.
At 47x FY13E EPS, the stock looks richly valued. On EV/EBIDTA basis, JFL is trading at 22.7x FY13E
while its global counterparts are valued between ~10x. Given the tremendous growth opportunity, the
premium seems justified. ACCUMULATE.
while its global counterparts are valued between ~10x. Given the tremendous growth opportunity, the
premium seems justified. ACCUMULATE.
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