Stock in Action - Jubilant Foodworks

Jubilant Foodworks Share Price Movement

Highlights

1. Jubilant Foodworks Q4 results showed significant increase in net profit for fourth quarter.
2. Domino's Pizza stock within Jubilant Foodworks gained 3.33% despite Sensex falling.
3. Jubilant Foodworks net profit surged to ₹208.24 Cr , helped by exceptional item gains.
4. Jubilant Foodworks revenue growth was driven by 23.85% increase in operations during quarter.
5. Jubilant Foodworks international expansion included stake increase in DP Eurasia NV to 94.33%.
6. DP Eurasia acquisition added significant value to Jubilant Foodworks’ portfolio in Turkey, Azerbaijan, & Georgia.
7. Jubilant Foodworks dividend was approved at 60% or ₹1.20 per equity share for FY24.
8. Jubilant Foodworks store expansion reached record opening of 356 stores, totaling 2,991 across six markets.
9. Jubilant Foodworks financial performance in Q4 FY24 showcased multi-fold increase in consolidated net profit.
10. Jubilant Foodworks investment in DP Eurasia NV was strategic move to enhance its international market presence.

Why Jubilant Foodworks Stock is in Buzz?

Jubilant Foodworks Ltd. (JFL), operator of Domino's Pizza & Dunkin' Donuts in India, has recently gained attention due to its notable stock performance & significant financial results. Despite Sensex falling, JFL shares surged by 3.33%, reflecting investor confidence driven by impressive Q4-FY24 results.

Highlights of Q4-FY24 Results of Jubilant Foodworks

1. Net Profit Surge: JFL reported multi-fold increase in consolidated net profit to ₹208.24  Cr  for Q4-FY24, significantly higher than ₹28.54  Cr  in same quarter of previous fiscal. This surge was attributed to exceptional item gains.

2. Revenue Growth: Company saw 23.85% rise in revenue from operations, reaching ₹1,572.79 Cr compared to ₹1,269.84 Cr in year-ago period. Total income, including other income, rose to ₹1,594.12 Cr.

3. International Expansion: JFL's subsidiary increased its stake in DP Eurasia NV to 94.33%, enhancing its presence in Turkey, Azerbaijan, & Georgia. This contributed ₹217.4 Cr to international revenue.

4. Store Expansion: JFL opened 23 new stores internationally in March quarter, contributing to total of 2,991 stores across six markets, including India.

5. Dividend Announcement: board approved 60% dividend, translating to ₹1.20 per equity share.

Shall I Invest in Jubilant Foodworks Share or Not? & Why?

Consider Investing in Jubilant Foodworks

- Strong Financial Performance: significant increase in net profit & revenue growth indicates robust financial health & operational efficiency.

- Expansion & Diversification: company’s aggressive store expansion & acquisition strategy in international markets demonstrate its growth potential.

- Market Position: As India’s largest food service company, JFL has strong market presence with popular brands like Domino's & Dunkin'.

Cautionary Notes

- High P/E Ratio: With P/E ratio of 82.35, stock appears overvalued compared to industry peers.
- Increased Expenses: 28.23% rise in total expenses might impact future profitability if not managed efficiently.

Conference call Highlights - May 2024

Jubilant Financial Performance

1. Consolidated revenue increased by 9.6% for FY24.
2. Gross profit increased due to improved gross margins led by deflation & productivity initiatives.
3. Personnel costs saw step-up due to minimum wage & salary increments & resourcing of new stores, commissaries, & tech teams.
4. Operating EBITDA margin for FY24 was 20.2%.
5. PAT margin after excluding net one-time gain was 4.1%.
6. PAT declined by 34.7% year on year due to increased investments in building network, portfolio, & operational capabilities.

Jubilant Operational Excellence

1. Commissioning of Jubilant Food Park in Bengaluru to enhance control over core-value chain.
2. Customer-facing operational KPIs registered record improvement.
3. Transition from 4-region to 7-region structure enhanced span of control & led to faster decision-making.
4. Strengthening digitization of operations through dedicated Rider App, OSSOM app for store teams, & introduction of Tablet POS ordering.

Jubilant Market-wise Highlights

1. Domino’s India achieved positive LFL growth in Q4 without any price increase.
2. Domino’s Turkey witnessed strong market-leading performance with System Sales up by 28.1% in Q4 FY24.
3. COFFY in Turkey became 8th largest café brand with System Sales increase of 209%.
4. Domino’s Bangladesh & Sri Lanka also showed revenue growth.
5. New brands started contributing to revenue growth, with 1.4% contribution in Q4 FY24.

Jubilant Business Outlook

1. Focus on volumetric growth, acquiring customers, & gaining market share.
2. Innovating on portfolio with assets to attract more customers.
3. Improving services, investing in technology & operations to meet consumer expectations.
4. Expanding occasions & category share through new brands like chicken, coffee, & Indo-Chinese food.
5. Network addition guidance for FY25: 180 stores for Domino's India, 50 for Domino's in Turkey, 20 for Domino's in Bangladesh, 70 for COFFY, 50 for Popeyes, & 25 for Hong's Kitchen.

Jubilant Multiplex Operators Collaboration

1. Competitors collaborating with multiplex operators for cross-promotion synergy benefits.
2. Concern raised about mall growth perspective due to better understanding of malls & rental rates by competitors.
3. Management confident in maintaining preferential treatment & demand due to value provided to consumers.
4. Will closely monitor situation & adapt if necessary.

Jubilant Popeyes Expansion

1. Aggressive expansion of Popeyes stores.
2. Targeting 12 stores per quarter.
3. Expansion beyond current states planned.
4. Focus on customer satisfaction & unique offerings like Cajun Flavors & chicken sandwich.
5. Positive response from customers with high average weekly orders at new stores.
6. Confident in building profitable franchise with room for further growth.

Jubilant Domino's Delivery Channel

1. Decent growth in Domino's delivery channel.
2. Faster growth compared to other listed players.
3. Facing competition from quick commerce players charging convenience & loyalty fees.
4. Offering free delivery & seeing positive response but still optimizing for better results.
5. Gaining market share within category.

Jubilant Project Vijay & Margins

1. Project Vijay boosting gross margins.
2. Continuously focusing on improving margins across various line items.
3. Looking to reduce costs & increase efficiencies to drive EBITDA margins.
4. Confident in generating savings & improving profitability.

Domino's India Medium-Term Target

1. Revised target of 4,000 stores from earlier 3,000.
2. Confidence in achieving target in 5-year period.
3. Utilizing data & technology to identify new store locations.
4. Focus on growth & expansion in untapped areas like airports & colleges.
5. Leveraging Domino's successful playbook & infrastructure for expansion.

Jubilant International Expansion & Acquisitions

1. Currently not looking at international acquisitions.
2. Focused on existing markets like India & Turkey.
3. Confident in growth potential in current geographies.
4. Prioritizing growth & profitability in existing markets before considering further expansions.

Margin Impact of Popeyes & Hong's Ramp-Up

1. Margin impact from Popeyes & Hong's ramp-up not determined yet.
2. Focus on maintaining margins without further dilution.
3. Prioritizing return on investment & financial discipline.

Domino's LFL Growth & Margin Maintenance

1. Need around 3% LFL growth to maintain margins at FY '24 level.
2. Confident in achieving target LFL growth to sustain margins.
3. Focused on optimizing operations & driving growth to maintain profitability.

Dine-In vs. Delivery Channel

1. Dine-in SSSG declined, focusing more on delivery channel.
2. Investing in delivery channel due to structural tailwinds.
3. Implementing initiatives to arrest decline in dine-in business.
4. Efficient store model & focus on positive operating leverage in delivery channel.

Jubilant Future Outlook
1. Optimistic about maintaining margins & driving growth.
2. Confidence in strategies implemented to navigate challenges.
3. Focus on customer satisfaction, operational efficiencies, & growth opportunities.

Conclusion

Considering strong growth prospects & recent financial performance, JFL appears to be promising investment. However, investors should weigh high valuation & expense growth before making decision.