Buy Jubilant FoodWorks Ltd For Target Rs.576 by Prabhudas Liladhar Capital Ltd
Steady demand outlook, higher inflation key headwind
4Q26 LFL came broadly in-line with our estimates, while healthy GM expansion driven by superior SKU mix and lower overheads led to EBITDA/PAT beat. Popeyes continued to witness strong traction with FY26 SSG growth of 28%, with momentum sustaining into Q1FY27. DP Eurasia performance is also improving, with the business now fully servicing acquisition-related debt through internal cash flows. However, healthy performance in Domino’s continues to be partially offset by softer trends in Coffy amidst stiff competition.
Management commentary remained healthy with Popeyes expected to contribute ~1– 1.5% to overall growth in the near term. JUBI plans to open ~300 stores (incl. Popeyes) in FY27. While near-term margins could remain under pressure amid wage inflation and geopolitical headwinds, management reiterated confidence on delivering ~200bps EBITDA margin expansion over FY24 adjusted EBITDA, led by operating leverage and supply chain initiatives.We expect ~90bps EBITDA margin expansion over FY26–FY28 driven by:
1) Higher average ticket size
2) Supply chain efficiencies
3) Benefits from tech investments and healthy LTL outlook.
We estimate 33.1% standalone EPS CAGR over FY26-28 on a low base. We have assigned 26x FY28 EV/EBIDTA to standalone nos and arrive at value of Rs508/share and 22x PAT to dp eurraisa (Rs 68/share) on its CY26 earnings. We assign an SOTP based target price of Rs576 (Rs584 earlier). JUBI seems best placed in QSR space to gain from expected improvement in consumer demand. Retain Buy.
Standalone Revenues up 6.4%, LFL growth at 0.2%:
Revenues grew by 6.4% YoY to Rs16.8bn (PLe: Rs16.86bn). SSG growth at 0.2% (Ple: 0.2%). Gross margins expanded by 98bps YoY to 75.5% (Ple: 76.5%). EBITDA grew by 11.5% YoY to Rs3.4bn (PLe:Rs3.14bn); Margins expanded by 94bps YoY to 20.5% (PLe:18.7%). Adj PAT declined by -2.8% YoY to Rs0.5bn (PLe:Rs0.252bn).. Added 69 net new stores, taking the total store count to 3,567 across brands and geographies
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