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JUBI has announced its intention to increase its stake to 100% in DP Eurasia vs. 49% currently. The 51% stake (balance) would be acquired for a consideration of Rs6.6bn at Rs88.5/share (EUR0.97/share). On successful completion, JUBI will have acquired the entire stake for ~Rs11bn (~Rs74/sh), at attractive H1 annualized EV/sales and EV/adj. EBITDA of ~1x and 8x, respectively. Further, JUBI plans to delist DP Eurasia, as its investors are concerned about geopolitical/currency risks (while JUBI sees it as a long-term investment). DP holds leadership share in Turkey and has recently exited Russia, which was its weaker market. While this acquisition gives JUBI access to a new market at attractive valuations, adverse currency movements and hyper-inflation in Turkey remain a risk. TRY has depreciated ~79% vs the INR, in the last five years. Given the volatile operating environment, we remain conservative and see the consistent delivery in DP as a potential upside. We have a SELL rating on JUBI, with TP of Rs380/share (45x Dec-25E EPS).

JUBI intends to acquire balance ~51% stake in DP Eurasia for Rs6.6bn

JUBI has announced its intention to raise its stake to 100% in DP Eurasia. It already owns 49% stake in DP, which was purchased in a staggered manner for Rs4.3bn (avg. price: Rs60/share). The balance 51% stake would be acquired in an all-cash deal for Rs6.6bn@Rs88.5/sh (Eur0.97/sh). Provided the stake purchase is successful, JUBI would have acquired 100% stake in DP Eurasia for Rs10.9bn (~Rs74/share). Business is currently at a comparable System sales/EBITDA/PAT annual run-rate of Rs15/1.5/1.3bn, and has net debt of Rs2bn (TRY/INR conversion of 2.88). The remnant stake acquisition is expected to be funded by availing a long-term loan by the Netherlands subsidiary. Parent JUBI would provide additional corporate guarantee amounting to EUR60mn for the subsidiary, in addition to the existing guarantee of ~EUR46mn.

DP Eurasia is listed on the London Stock Exchange and is an exclusive master franchisee of the Domino’s Pizza brand in Turkey, Azerbaijan and Georgia. It operates 694 Domino’s pizza stores (678/10/6 stores in Turkey/Azerbaijan/Georgia) and 67 COFFY (owned coffee brand) stores, as of end Oct-23. The company follows an asset-light model, with 88%/78% stores franchised under the pizza/coffee format. H1CY23 system sales stand at ~Rs7.5bn, with EBITDA of Rs0.8bn and net debt of Rs2bn.

Strong traction in region for the pizza category; CY23 outlook upgraded

DP Eurasia upgraded its guidance to a high-teens inflation-adjusted LFL growth for CY23 (from the earlier low-teens visibility), on the back of the strong demand environment. Organic and LFL sales momentum is expected to sustain, largely led by network expansion, volume growth and price adjustments. It also upgraded capex guidance to ~Rs576mn from ~Rs461mn earlier (TRY/INR conversion of 2.88) owing to higher investments in COFFY, largely owing to the currency depreciation impact. DP Eurasia opened 20/22 Domino’s/COFFY stores in H1CY23 and expects 15-20/28-38 store openings, respectively, in H2CY23. Key focus remains on improving profitability and reducing debt. While current focus on developing business in existing markets sustains, likely expansion to other underpenetrated regions is still viewed as a future lever.

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