Prabhudas Lilladher is bullish on Jubilant FoodWorks has recommended buy rating on the stock with a target price of Rs 1459 in its research report date July 24, 2019.
Prabhudas Lilladher's research report on Jubilant FoodWorks
We cut our FY20 and FY21 EPS estimate by 10.6% and 10.5% which includes ~8% impact due to IndAS 116 impact. 1Q has shown tepid performnce due to high base, store cannibalisation and impact of high prices of raw materials. However we remain positive on the medium term growth prospects of JUBI due to 1) unchanged guidance of 100 Dominos store additions 2) ~4% price increase after 3 years does not disturb consumer value proposition 3) menu innovations with World Pizza league 4) new store design to imbibe efficiencies in operations. We believe that Dominos will not be impacted by food aggregators given strong brand and its strength in delivery based model. Although deterioraion in consumer sentiment poses a near term challenge, we excpect Dominos to emerge stronger once the demand revives. We estimate mid to high single SSG and PAT growth of 9.7% in FY20 and 25.4% in FY21.
Outlook
We value the stock at 40xJune21 EPS and arrive at target price of Rs1459 (Rs1541 earlier). We believe that current turmoil provides a good opportunity to accumlate stock for medium term gains. Retain BUY.
For all recommendations report, click here
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