Neutral Jubilant FoodWorks Ltd For Target Rs.725 by Motilal Oswal Financial Services Ltd
Steady performance continues
* Jubilant FoodWorks (JUBI) posted an 18% YoY growth in standalone revenue to INR17b (in line) in 1QFY26. Domino’s orders grew 17.3%, with LFL growth of 11.6%. The delivery business reported a strong 25% YoY revenue growth and 20% LFL growth, contributing 73% (69% in 1QFY25) to total revenue. Dine-in revenue rose 2.5% YoY, majorly driven by lunch hour meals.
* JUBI has avoided broad-based price hikes for the past 2.5 years, bringing only calibrated increases in select cases. That said, management does not expect any pricing action in the near term.
* Domino’s India added 61 new stores (+10% YoY) and entered nine new cities in 1Q. The company plans to add ~250 Dominos India and ~30 Popeyes stores in FY26, which will help broaden its customer reach.
* Standalone gross margin contracted 200bp YoY and 40bp QoQ to 74.1% (est. 74.7%), affected by higher investments in growth, new customer acquisition, and changes in the delivery mix. EBITDA margin contracted 30bp YoY and QoQ to 19%, while EBITDA grew 16% YoY to INR3.2b (in line). Pre-Ind-AS EBITDA margin expanded 40bp YoY (-180bp in base) to 12%, while EBITDA rose 23% (-5% in base).
* Domino’s Turkey LFL growth declined 2.2%, while COFFY LFL declined 2.1%, adjusted for inflation. PAT margin stood at 9.4%. Domino’s revenue growth was healthy in Sri Lanka, which reported 42% YoY, while Bangladesh reported 4% YoY.
* JUBI’s focus on customer acquisition and increasing order frequency has been fueling strong growth in the delivery segment. Value offering and product innovation will continue to drive order growth in FY26. We model a standalone pre-IND AS EBITDA margin of 12-14% for FY26-28E. We remain constructive on the business. However, given the rich valuations, we reiterate our Neutral rating on the stock with a TP of INR725—Indian business at 35x EV/EBITDA (pre-IND AS) and International at 18x EV/EBITDA on Jun’27E.
In-line print; delivery LFL rises 20%
* Double-digit LFL growth continues: JUBI reported sales growth of 18% YoY to INR17b (est. INR17.1b), led by order growth of 17.3%. LFL increased 11.6% (delivery LFL up 20.1%).
* Store rollout remains strong: In India, JUBI added 58 net stores, bringing the count to 2,362 stores. Domino’s opened 61 new Domino’s Pizza stores, bringing the total count to 2,240 stores. Popeyes closed 1 store, bringing the total count to 60 stores. Hong’s Kitchen stores remained unchanged at 33. Dunkin’ Donuts closed two stores, bringing the total count to 29.
* Steady operating margins: Gross profit reported 15% YoY growth of INR12.6b (est. INR 12.8b). Gross margin contracted 200bp YoY/40bp QoQ to 74.1% (est. 74.7%). EBITDA margin contracted marginally 30bp YoY to 19% (est. 19.4%). Pre-Ind AS EBITDA margin expanded 40bp YoY/20bp QoQ to 12% (est. 11.7%). PBT margin was at 5.2% vs. 4.7% in 1QFY25 and 4.3% in 4QFY25.
* Growth in profitability: EBITDA grew 16% YoY to INR3.2b (est. INR3.3b). PBT (before exceptional) rose 29% YoY to INR883m (est. INR888m). Adj. PAT rose 30% YoY to INR667m (est. 665m).
International business
* Domino’s Sri Lanka revenue rose 42% YoY to INR248m. No stores were opened in Sri Lanka.
* Domino’s Bangladesh revenue rose 4% YoY to INR177m. One store was opened in Bangladesh, bringing the total count to 40 stores.
DPEU
* DPEU System Sales was INR9,300m. Domino’s Turkey LFL growth was down 2.2% while COFFY LFL down 2.1%.
* PAT margin is 9.4%.
* In DP Eurasia, the company opened 12 stores in 1QFY26, taking total count to 935 stores.
Highlights from the management commentary
* The company has avoided broad-based price hikes for the past 2.5 years, opting instead for calibrated increases in select cases. This approach is reflected in value growth marginally outpacing order growth.
* Management will implement price hikes only when necessary, noting that current inflation levels do not warrant significant pricing actions.
* The long-term store expansion target is 5,000 outlets, with a focus on innovation, digital asset improvement, faster deliveries in top metros, and strengthening on-ground teams - ensuring growth is driven by operational initiatives, not just base effects.
* The company has invested heavily in stores, technology, and supply chain infrastructure to fuel future growth, which has led to higher depreciation in the short term.
* The company remains focused on gross margin expansion over time. Management clarified that gross margins are not impacted by aggregator contracts.
Valuation and view
* No material changes were made to our EBITDA estimates for FY26 and FY27.
* JUBI has been the key beneficiary of healthy traffic growth for the delivery business. Delivery is expected to outperform in the near term, which will continue to lead to better growth metrics than those of its peers in the near term.
* JUBI’s focus on customer acquisition and increasing order frequency has been fueling strong growth in the delivery segment. Value offering and product innovation will continue to drive order growth in FY26. We model a standalone pre-IND AS EBITDA margin of 12-14% for FY26-28E. We remain constructive on the business. However, given the rich valuations, we reiterate our Neutral rating on the stock with a TP of INR725—Indian business at 35x EV/EBITDA (pre-IND AS) and International at 18x EV/EBITDA on Jun’27E.
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