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Steady performer; attractive valuation

We have recently upgraded JUBI to BUY in our QSR thematic in Aug’26, as we believe the company is best positioned among listed QSR players to benefit from a recovery in discretionary consumption. Domino’s Pizza has demonstrated relatively resilient growth, delivering like-for-like (LFL) growth of 6.5% in FY26. LFL has improved significantly in recent quarters, from 0.2% in 4QFY26 to 2.5% in 1QFY27 and 4.1% in 2QFY27. Moreover, Popeyes is emerging as an incremental growth engine, with 97% revenue growth in 1Q and average daily sales (ADS) close to KFC. Besides, its reinvestment in supply chain in the last two-three years is sufficient for ~5000 store network in India; hence, the company would focus on productivity. It will lead to better capital efficiency and operating leverage, which should support margin in an inflationary scenario. Following the recent stock correction, we believe risk-reward is attractive (at 15x FY28E EV/EBITDA) and maintain our BUY rating with a TP of INR625

* Domino’s Pizza growth recovery gaining traction: LFL growth improved from 0.2% in 4QFY26 to 2.5% in 1QFY27 and 4.1% in 2QFY27. A favorable base in 2HFY27, consistent delivery growth and a recovery in DITA (Dine-in and takeaways) should support the growth trajectory. The company has guided for LFL of 5-7% in FY27, implying high-single digit LFL in 2HFY27. Delivery now contributes ~76% of sales, supported by strong brand positioning, higher customer engagement and digital initiatives. Management’s renewed focus on DITA through value offers, store upgrades and dedicated teams provides an additional growth lever.

* Popeyes emerging as the second growth engine: Popeyes revenue grew 97% YoY to INR700m in 1QFY27, with LFL growth of >40% for the third consecutive quarter. The store network increased from 42 in FY24 to 88 in 1QFY27, while ADS reached to INR96k (equal to KFC), with seven cities exceeding INR100k. Management targets 250 stores and INR10b in revenue over the next 3-4 years. While upfront marketing and scale-related costs continue to weigh on overall profitability, improving store productivity and operating leverage should support margin expansion as the business scales up.

* Menu innovation and digital initiatives to drive frequency and ticket size: Domino’s Pizza is expanding its menu across value, premium, group-sharing and adjacent categories to drive up consumption across occasions and price points. At Domino’s, value offerings support traffic, while products such as Big Big Pizza, Sourdough and Cheese Lava target higher ticket sizes; chicken, beverages and desserts offer opportunities to increase add-on sales. At Popeyes, differentiated chicken products, sauces and flavor-led launches are strengthening brand appeal. The company’s Domino’s Pizza app accounts for ~70% of online orders, enabling targeted offers, customized combos and loyalty-led engagement and reducing dependence on aggregators.

* Supply-chain capex largely behind; capital allocation shifting toward growth: JUBI has commissioned its Bengaluru food park in Nov’23 and Mumbai food factory in Mar’26. The company now has eight commissaries that can support a network of ~5,000 stores, providing enough capacity for the next few years of expansion. The company guided for capex of INR7.5-9.0b in FY27, broadly similar to FY26, primarily for new Domino’s and Popeyes stores, store upgrades and technology. We believe better store productivity should support RoCE and FCF improvement over the medium term.

* Margin recovery likely to expand in medium term: Management aims for a ~200bp gain in standalone EBITDA margin pre-Ind AS over FY24-FY28, although margins have remained broadly flat at ~12.5% over FY24-26. FY27 is likely to be a transition year, with productivity gains largely offsetting input cost inflation. We model EBITDA margin improvement to become more visible in FY28, driven by better sales growth, operating leverage and supply-chain efficiencies. We remain conservative and build in flat margins in FY27 at 12.6% and a modest 40bp expansion in FY28 to 13%, leaving scope for upside if operational efficiencies materialize faster than expected.

* International operations provide earnings and cash-flow support; underlying demand remains weak: DP Eurasia (26% of consol. revenue) reported 28% YoY revenue growth to INR6.7b in 1QFY27. The business has started to pay dividends to JUBI. However, inflation-adjusted negative LFL growth at Domino’s Turkey and continued pressure at COFFY indicate subdued underlying demand. Hyperinflation, accounting and currency movements also create volatility in reported performance, limiting the business as a near-term growth driver.

* Valuation and view: We expect standalone revenue/EBITDA/PAT to grow at a CAGR of 13%/15%/21% over FY26-28E, with pre-Ind AS EBITDA margins improving to 12.5-13.0%. The stock is trading at an attractive valuation of 15x FY28 EV/EBITDA (pre-IND AS). We maintain our BUY rating on the stock with a TP of INR625, valuing the India business at 27x and international operations at 15x EV/EBITDA (pre-Ind AS) on Sep’28E.

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