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Network expansion to drive growth Jubilant FoodWorks Ltd (JFL) is an Indian operator of quick service restaurant brands. It is the franchisee of Domino’s in India, Nepal, Sri Lanka and Bangladesh, and that of Dunkin’ Donuts in India.

* JFL’s standalone revenue rose 9.9% YoY to Rs. 1,440cr in Q1FY25, primarily driven by 8.5% growth in the Indian business of Domino’s.

* EBITDA edged 0.6% higher YoY, whereas EBITDA margin narrowed 180bps YoY to 19.3% on account of higher other expenses, up 18.9% YoY in Q1FY25.

* JFL logged strong revenue growth, driven by the Indian business of Domino’s, new store additions and market share gains. The company’s strategic focus on innovation, operational efficiencies and cost optimisation further enhances its growth potential. Therefore, we upgrade our rating on the stock to ACCUMULATE, with a revised target price of Rs. 738 based on the sum-of-the-parts (SOTP) valuation.

Indian business of Domino’s aids topline growth

JFL’s revenue increased 9.9% YoY in Q1FY25 to Rs. 1,440cr, supported by an 8.5% rise in the Indian business of Domino’s, which in turn, was driven by order growth of 16.0% YoY. Delivery channel revenue increased 15.7% YoY on account of LFL growth of 12.1% YoY. However, revenue from the Dine-in segment fell 5.7% YoY. Average daily sales of Domino’s mature stores rose 3.0% YoY to Rs. 79,876, the highest in the last five quarters. During the quarter, Domino’s opened 34 new stores. The total count of Domino’s stores stood at 2,029 against 1,838 stores in Q1FY24. The company is serving 427 cities across India, having forayed into 33 new cities compared with the same period last year

Higher other expenses dent EBITDA margin

EBITDA edged 0.6% higher YoY to Rs. 278cr owing to higher other expenses. Other expenses increased 18.9% YoY to Rs. 561cr, other expenses to sales ratio rose to 39% from 36% in Q1FY24. Resultantly, EBITDA margin weakened 180bps YoY to 19.3%. Profit after tax declined 31.5% YoY to Rs. 52cr on account of lower EBITDA and a 20.8% YoY surge in interest expenses to Rs. 62cr.

Key concall highlights

* Revenue from Domino’s in Bangladesh increased Rs. 17cr, up 42.2% YoY, aided by accelerated network expansion and launch of new products. Revenue from Sri Lanka was up 17% YoY to Rs. 17.4cr.

* The delivery channel mix of the Indian business of Domino’s expanded to 68.9% from 64.3% in Q1FY24, reflecting a shift towards delivery-based sales

Valuation

The company recorded robust revenue growth, driven by the domestic business and addition of new stores, and market share gains. The company's strategic emphasis on driving value and acquiring new customers through innovation across its portfolio, spanning both value and premium segments, underscores its commitment to sustainable growth. Continuous service improvements through technology and operational enhancements, expansion into new location, and a focus on optimising costs to expand margins, collectively reinforce the company's growth potential. Thus, we upgrade our rating to ACCUMULATE on the stock, with a revised target price of Rs. 738 based on the SOTP valuation.

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SEBI Registration Number: INH200000345