Jubilant Foodworks delivers strong Q4FY21 results; focus now on multiple drivers for long term growth

Brokerage firm Sharekhan maintains Buy rating on Jubilant Foodworks with a revised price target of Rs 3620. April/May 2021 ended with business of 90% compared to pre-COVID levels despite localised lockdown. Jubilant Foodworks Management expects strong recovery in the coming months.

Jubilant Foodworks will not take any price hikes in the current uncertain environment. Jubilant Foodworks will focus on driving margins through recovery in sales and efficiencies. Jubilant Foodworks has entered into an agreement to develop, establish, own, and operate Popeyes restaurants in India, Bangladesh, Nepal and Bhutan. As on March 31, 2021, liquid funds with the company stood at Rs 602.4 crore. Pratik Pota’s term as CEO has been extended till 2025. 

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Jubilant Foodworks reported revenue growth of 14% to Rs 1025.9 crore. Same store sales (SSSG) stood at 11.8% (like-to-like same store sales growth [SSSG] stood at 13.7%). Delivery channel and takeaway channel registered growth of 28.7% and 76.9%, respectively, during the quarter. Average online order contribution to deliver sales stood at 98%. Dine-in revenue recovered to 64.4% in Q4 (improved from 42% in Q3).

Jubilant Foodworks Gross margin improved by 305 bps y-o-y to 77.5% mainly on account of benign input prices, lesser discounts by food aggregators, lower wastages, and Rs 30 delivery charges introduced during the quarter. Operating profit margin (OPM) expanded by 542 bps y-o-y to 24.3%, slightly lower than our expectation of 25%.

Jubilant Foodworks added 53 new stores in Q4 (including 50 Domino’s stores, 1 Dunkin Donuts store, and 1 store each of Hong’s Kitchen and Ekdum!). Jubilant Foodworks ended the fiscal with total store count addition of 134 stores and expects to add a similar number of stores in FY2022. Jubilant Foodworks ended FY2021 with revenue and PAT declining by 16% and 29%, respectively, affected by disrupted performance in H1FY2021. Dine-in was completely shut during localised lockdown in the second wave.

Key positives for Jubilant Foodworks:

• Dominos dine in business recovered to 64%; Hong’s Kitchen business recovered to pre-COVID level in Q4, led by higher ordering
• Online ordering to delivery sales stood at 98.2% (mobile ordering 97.4%); downloads of mobile ordering app stood at 57.2 million, the highest in the past few quarters
• April-May 2021 saw just 10% dip in revenue compared to pre-COVID levels despite the shutdown of dine-in business in all the stores due to localised lockdown.
• However, Jubilant Foodworks managed to register sales of 95% and 88% in April 2021 and May 2021, respectively, on account of its strong delivery sales. 

However, Jubilant Foodworks managed to register sales of 95% and 88% in April 2021 and May 2021, respectively, on account of its strong delivery sales. 
Large shifts to organised players, increased frequency in customer ordering, penetration of delivery models improving in tier 2/3 towns, and addition of new customers will be key growth drivers in the near to medium term.