Jubilant FoodWorks Ltd - Research Report

Private Client Research




Consumer Food


Jubilant FoodWorks Ltd

Consumer Food

March 25, 2020

Sensex: 28535.78

CNX Nifty: 8317.85


BSE: 533155

Reco Price
Rs. 1269
Price Target (2 - 3 Years)
Rs. 2000


March 25, 2020



CNX Nifty








Stock Data

CMP (Rs)
Face value (Rs)
52 Week Range (Rs)
1973.85 - 1077.90
Market cap (Rs Crores)
Price To Book Value (x)
P/E Ratio (x)

One Year indexed Stock Performance

Jubilant FoodWorks Ltd Sensex
Jubilant FoodWorks Ltd
Return (%)


(in %)

+91 22 6639 3000



Jubilant Foodworks Limited is part of Jubilant Bhartia group and is one of India’s largest food service Company, with a network of 1,325 Domino’s Pizza restaurants across 282 cities (as of December 31, 2019). The Company has the exclusive rights to develop and operate Domino’s Pizza brand in India, Sri Lanka, Bangladesh and Nepal. The Company launched its first Domino’s Pizza restaurant in Delhi in January 1996 and it is the largest franchisee for Domino’s brand outside U.S. At present, it operates in Sri Lanka and Bangladesh through its subsidiary companies.

The Company also has exclusive rights for developing and operating Dunkin’ Donuts restaurants for India and has 32 Dunkin’ Donuts restaurants across 10 cities in India (as of December 31, 2019). The Company launched its first Dunkin' restaurant in Delhi in April 2012 and it serves wide variety of donuts, coffee, beverages, sandwiches and other goods. JFL has entered into the Chinese cuisine segment with its first owned restaurant brand, ‘Hong’s Kitchen’ and has 2 Hong’s kitchen restaurant across 2 cities in India (as of December 31, 2019). The Company launched its first restaurant in Gurugram in March 2019 and the restaurant has young, international-looking and trendy design inspired by the colours and the hustle of Asian street markets.

Jubilant FoodWorks Limited, is among India’s largest food service companies and boasts of one of the most successful food delivery models in the Country.

Established market position in the QSR segment:
With a total of 1,325 stores across 282 cities, Dominos is the largest and most diversified (in terms of geographical presence) QSR in India. The company has been able to grow number of Domino’s store network at 16% CAGR since IPO in FY11 which is the highest in comparison to its peers. The company is a market leader in the pizza segment through its exclusive rights to operate Domino's Pizza brand outlets in India, Sri Lanka, Bangladesh, and Nepal. Pizza is the largest sub-segment in the QSR space, and is expected to grow at steady space driven by increase in consumer propensity to eat out, rising disposable income, a greater need for convenience, and an increase in the women workforce. The company, with its established position, is expected to benefit from this trend of eating out.

Product Innovation their biggest competitive advantage:
The company's ability to consistently innovate products and be flexible in terms of offering (Dominos has different menu for different store-formats/small-towns) differentiates Dominos from competition. During FY17-19, the company had launched /upgraded around 27 products of which 18 were new Pizza variants, 2 new variants of crusts and 4 new sides. The company had introduced new flavours and combinations to delight their consumers with their ‘World Pizza League' offering, that comprised 10 new flavours of pizza that celebrated the most popular flavours from the world's top cricketing nations. This specific campaign which was launched just ahead of the busy cricket season, generated a lot of interest and attained popularity, but now it has been discontinued. They continue to innovate with new products and provide more value to their customers with Everyday Value offers.

Jubilant FoodWorks

Efficient supply-chain network:
The company operates 11 regional supply chain centres, which source and supply primary raw materials, thus helping to ensure consistent quality and timely delivery of these to its stores. The company also benefits from higher share of home deliveries. The company has been the pioneer in disrupting the food delivery space by offering 30-min or free delivery service to customer since FY12. It is also looking to further reduce its delivery time from 30 mins to 26 mins and provide additional services like late night delivery, train delivery, etc.

Hong’s Kitchen will be their new growth driver:
The company forayed into Chinese cuisine in FY19 with the launch of ‘Hong’s Kitchen’ (HK) in Gurugram and it opened its 2nd store in Delhi during the quarter ended December 2019. The company has positioned Hong's Kitchen to fill the gap between street food and fine dining restaurants. Chinese food is the second most preferred cuisine after North Indian food in India, thus enabling more scalability of growth for chinese cuisine in comparison to pizza. The benefit of scale (supply chain and technology) that the company has achieved for Dominos could be synergistically used while scaling up Hong's Kitchen. Further, incremental capex for Hong's Kitchen would only relate to that of store expansion.

Accurate marketing campaigns which connects with consumers:
Domino’s Pizza, has unveiled its new marketing campaign ‘Dil, Dosti, Domino’s’ in Q3 FY20. The campaign aims to strengthen the emotional connect with the consumers by creating tasty and memorable moments of togetherness while capturing it in the new tagline “Dil, Dosti, Domino’s. Domino’s has been a progressive brand in many ways. The promise of ‘30 minutes or free’ a decade ago was well ahead of its time. Even today, the brand continues to stay connected with emerging consumer trends. The consumers today are seeking brands that are authentic, inclusive and engaging. Domino’s has always attempted to stay relevant to the new age consumer through various means like acknowledging consumer feedback and launching ‘All New Domino’s’ product improvement campaign, offering great value to consumer with the ‘Everyday Value’ campaign, offering best in class digital ordering experience on the ‘Domino’s App’ or offering variety to the consumers through exciting launches like ‘World Pizza League’.

Jubilant FoodWorks

Improving their mobile technology:
In a consumer-driven tech-first world where food-tech companies are growing, the company has relaunched their native app with improved functionalities such as advance ordering, live tracking of food order, one click order and an improved payments interface. The company is embracing digital transformation by using consumer data to improve their products and service delivery, including a seamlessly digital consumer experience. In FY 19, the company saw greater contribution of online ordering to overall sales at 70% driven by the all new Domino's App. With an improved interface and upgraded features, the app has seen a surge in the number of downloads by 2.5x within 2 years to 2.94 crore in Q3 FY20.


The food service sector is among the fastest growing sectors in India. The growth in Indian FSI is driven by changing demographics, lifestyles and economic environment. Food service as an emerging key segment in the Indian economy, with a value of US$ 61 billion, stands at the third position after Indian retail and insurance. It is estimated that the overall FSI market size is Rs 423,865 crores in 2018-19 and is expected to reach Rs 599,782 crores by 2022-23 at a CAGR of 9% (Source: NRAI India Food Services Report 2019). The Indian FSI has experienced consistent growth over the last five years, fuelled by urbanisation, increasing number of nuclear families and working women, steady growth in incomes and growing availability of a wide variety of restaurants. Digital-led online ordering, home delivery, third-party aggregator options, cashback facilities, reward points and heavy discounts highlight the current delights available to the consumers.

Quick Service Restaurants (QSRs) holds the largest share in the FSI and have been a critical segment in the sector. The organised QSR market is estimated to be worth Rs 32,880 crores in FY 2019. The chain segment contributes 55% of the organised QSR market while the standalone segment accounts for the remaining 45%. India’s per capita income has grown steadily, leading to an increase in disposable incomes. Also, more women joining the workforce has given rise to double-income households, giving a boost to the purchasing power. This is driving the growth of the FSI.

Profit & Loss Statement:- (Consolidated)

(Rs Crores)

Particulars FY17 FY18 FY19 FY20 E FY21 E FY22 E
Net Sales 2583.40 3018.40 3563.10 3935.20 4368.10 4979.60
Growth% 17.00% 18.00% 10.00% 11.00% 14.00%
COGS 630.70 765.90 886.10 960.60 1105.90 1243.30
Gross Profit 1952.70 2252.50 2677.00 2974.70 3262.10 3736.30
Employee Cost 594.70 613.90 681.80 740.50 828.10 955.30
Other Expenses 1116.90 1198.60 1395.50 1330.10 1441.50 1643.30
EBITDA 241.10 440.00 599.70 904.00 992.60 1137.70
Margin% 9.00% 15.00% 17.00% 23.00% 23.00% 23.00%
Depreciation 155.40 160.10 157.40 346.20 380.70 420.80
EBIT 85.70 279.90 442.30 557.80 611.90 716.90
Other Income 14.70 23.00 47.30 55.50 62.70 65.70
Interest 0.00 0.00 0.00 168.00 165.30 165.30
Profit Before Tax 100.40 302.90 489.60 445.30 509.30 617.30
Provision for Tax 30.50 106.80 171.60 112.20 128.30 155.60
Profit After Tax 69.90 196.10 318.00 333.10 380.90 461.70
Pat margins% 2.71% 6.50% 8.92% 8.46% 8.72% 9.27%
Adjusted EPS 5.30 14.86 24.09 25.23 28.86 34.98
Source: Stockaxis Research, Company Data


We expect the company to drive growth on back of continuous product innovation, providing more value to their customers with Everyday Value offers, improve customer experience by improving delivery time, rolling out a new store design and investing in technology and analytics. Further the company turned around Dunkin’ Donuts and brought it to break even in FY19 and introduced a new business vertical in form of Hong's kitchen. We expect the company to deliver a stable performance in Same Store Sales growth numbers, while growing margins through cost rationalisation and operating leverage. The stock is currently trading at 36.2x FY22E EPS.