 "Dominos")
Shares of Jubilant FoodWorks rallied 5 per cent to hit a record high of Rs 3,331.85 on the BSE in intra-day on Wednesday after the company reported over three-fold jump in its consolidated net profit at Rs 105.30 crore for the fourth quarter ended March 2021 (Q4FY21). It had reported a profit of Rs 32.53 crore in the year-ago quarter.
Jubilant FoodWorks operates fast-food chains Domino's Pizza and Dunkin' Donuts. The board has recommended a final dividend of Rs 6 per equity share i.e. 60 per cent of the face value of Rs 10 each for the financial year 2020-21.
The stock surpassed its previous high of Rs 3,250.15 touched on June 11, 2021. In the past one month, it has outperformed the market by surging nearly 20 per cent as against an 8 per cent gain in the S&P BSE Sensex.
In Q4FY21, the company’s revenue from operations grew 14.2 per cent year-on-year (YoY) to Rs 1,038 crore during the quarter under review. The figure stood at Rs 909 crore in the corresponding quarter of the fiscal year 2019-20. "This was driven by Domino's Like-for-Like (LFL) sales growth (adjusted for temporary restaurant closures) of 15.1 per cent and same-store growth (SSG) of 11.8 per cent. Domino's witnessed continued momentum in delivery and takeaway channels which grew by 28.7 per cent and 76.9 per cent, respectively," it said.
EBITDA (earnings before interest, taxes, depreciation, and amortisation) margin expanded 540 basis points (bps) YoY to 24.3 per cent.
The company witnessed around 90 per cent recovery in both April and May versus pre-COVID levels, despite dine-in being minimal. Cheese and edible oil costs are rising, but the management does not expect any significant impact on profitability due to cost savings.
Motilal Oswal Securities cut their FY22E and FY23E EPS estimate by 12.5 per cent and 5.2 per cent, respectively due to the lockdowns triggered by the second COVID wave impacting the dine-in business. Nevertheless, the company continues to show strong momentum in the delivery and takeaway channel, the brokerage firm noted.
"Jubilant FoodWorks has been the biggest success story in the Indian QSR industry in terms of growth, with its delivery-based business model. It offers the highest margin and best return ratios among peers. Once the pandemic ends, its longer-term prospects appear even brighter with a faster shift toward organised players in the Indian Food Service industry, key channels – Delivery and Takeaway – gaining further traction, and increased usage of technology by customers, which facilitates growth for players like Jubilant (that is at the vanguard of this move). The introduction of delivery charges (without any negative feedback on ratings) and closure of 105 least profitable stores in FY21 are driving a structural margin improvement," it said in a results update.
