Dolat Capital recommended accumulate rating on Jubilant Foodworks with a target price of Rs 1225 in its research report dated July 24, 2019.
Dolat Capital's research report on Jubilant Foodworks
JFL’s Q1FY20 results were below our estimate, with a 4.1% YoY same store sales growth (SSSG) vs our estimate of 5%. A high base of 25.9% YoY in SSSG restricted overall growth in Q1FY20. We believe JFL will likely post a high single digit SSSG in the ensuing quarters, as the base remains highly unfavorable. In addition, margins are likely to remain under pressure in the near term due to store additions, escalating RM prices, and rise in A&P costs.
Outlook
We revise our FY20E and FY21E EPS estimates downwards to ` 25.5 and ` 30.6, from ` 30.4 and ` 34.1, respectively to factor in Q1 performance and change in accounting standards. Maintain Accumulate, with TP of ` 1,225 (40x FY21E EPS).
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