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Steady demand outlook, rising inflation key headwind

We remain constructive on JUBI, driven by

1) Steady demand outlook with improving consumer trends

2) limited margin impact from inflationary pressure, supported by price hikes, superior mix and supply chain efficiency

3) continued robust performance and scale up in Popeyes. 2QFY27 SSG was in line, while healthy GM expansion was driven by superior SKU mix and supply chain efficiency. Popeyes continued to witness robust traction with 53% SSG growth in 2QFY27, with momentum sustaining into 3QFY27. DP Eurasia performance is improving, although PAT remains impacted by MGL ( Monetary gain and loss due to inflation) and softer trends in Coffy amid rising coffee prices and stiff competition.

JUBI reiterated confidence on delivering ~200bps EBITDA margin expansion over FY24 adjusted EBITDA despite near term headwinds, led by operating leverage and supply chain initiatives .We expect ~70bps EBITDA margin expansion over FY27–FY29 driven by: 1) higher average ticket size, 2) supply chain efficiencies, and 3) benefits from tech investments and healthy LTL outlook, with expected improvement from Q3FY27.We estimate 44.4% standalone EPS CAGR over FY27-29 on a low base. We have assigned 25x FY28 PRE IND AS EV/EBIDTA to standalone nos and arrive at value of Rs464/share and 22x PAT to dp eurraisa (Rs 68/share) on its CY27 earnings. We assign an SOTP based target price of Rs532 (Rs553 earlier). Retain Buy.

Standalone Revenues up 11.5%, LFL growth at 4.1%:

Revenues grew by 11.5% YoY to Rs18.8bn (PLe: Rs18.858bn). Gross margins expanded by 110bps YoY to 75.5% (Ple: 75.7%). EBITDA grew by 12.4% YoY to Rs3.7bn (PLe:Rs3.696bn); Margins expanded by 16bps YoY to 19.8% (PLe:19.6%). Adj PAT grew by 7.6% YoY to Rs0.7bn (PLe:Rs0.638bn). Standalone Pre IND AS EBIDTA margin rose by 6bps YoY to 12.4%. Added 108 net new stores, taking the total India store count to 2728.

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SEBI Registration number is INH000000933