26 July 2012
1QFY13 Results Update | Sector: Retail
Jubilant Foodworks
BSE SENSEX
16,846
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1,6,12 Rel. Perf. (%)
S&P CNX
5,110
CMP: INR1,189
TP: INR1,0541,054
Neutral
JUBI IN
63.5
1,189/633
4/38/47
M.Cap. (INR b)
75.5
M.Cap. (USD b)
1.3
Jubilant Foodworks' (JUBI) adjusted PAT for 1QFY13 grew 39.3% to INR323m (v/s our estimate of INR332m).
 Same store sales (SSS) growth at 22.3% is healthy; however, the management indicated softening in both
consumption and customer acquisition.
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Gross margin declined 110bp to 73.4% due to high inflation in inputs. EBITDA margin contracted 90bp. Cost
towards commissioning Dunkin Donuts stores was ~INR18m during the quarter.
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JUBI has revised its Dominos store rollout target for FY13 to 100 from 90. It opened three Dunkin Donuts stores
in 1QFY13 and maintains its target of opening 10 stores in FY13 and 80-100 stores in the first five years of
operations.
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Though Dominos' SSS growth remains healthy, initial signs of tapering off are evident. Our estimates factor
SSS growth of 23% in FY13 and 20% in FY14.
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With increasing number of Dominos and Dunkin Donuts stores, we expect initial losses and overheads to
increase.
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We remain positive on JUBI's business. However, at 49.6x FY13E and 33.8x FY14E EPS, we believe valuations
are rich and price in most positives. Neutral.
Sreekanth P.V.S. ([email protected]); +9122 3029 5120
Investors are advised to refer through disclosures made at the end of the Research Report.
Jubilant Foodworks
Conference call highlights
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JUBI deferred price hike from March to June end due to weakening sentiment and
service tax, plans to take another 3% price hike during FY13.
The company will continue to invest aggressively in brand building as it expands
both Dominos and Dunkin Donuts.
Management indicated that SSS growth during the quarter was driven more by
the number of orders than price hikes. However, it has witnessed some slowdown
both in terms of customer consumption and customer acquisition.
Gross margins were weak due to the delay in price hikes (typically taken in MarchApril). Mgmt guided 74-75% gross margins for FY13.
Online ordering currently at 10-12% is quite low when compared to developed
countries (ranges between 30-40%). Management indicated that this could
substantially increase once the company starts TV advertising.
EBITDA margin decline has been largely attributed to operating expenses of the
newly opened Dunkin Donut stores. JUBI maintained that it would be able to
deliver EBITDA margin of 18%.
Dunkin Donuts' operational costs were INR18m for the quarter. JUBI has opened 3
Dunkin Donuts stores in 1QFY13. The company maintains its target of opening 10
stores in FY13 and 80-100 stores in the first 5 years of operation.
JUBI's plan to open 5-6 stores in Sri Lanka is also on track, and expects 25-30 stores
over the next five years here.
SSS growth at 22.3%; gross and EBITDA margins contract
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26 July 2012
Net sales grew 45% YoY to INR3.14b (est INR3.1b); SSS growth for the quarter was
22.3% (est 25%).
Gross margin was down 110bp YoY at 73.4% and 120bp QoQ.
Staff cost was 18.4% of sales declined 80bp YoY. 4,362 employees were added
since June 2011, taking the total to 16,955.
Rent increased 40bp YoY to 7.9% of sales (7.5% of sales in Q1FY12); other
expenditure increased 40bp to 28.8% of sales (v/s 28.4% of sales in Q1FY12).
EBITDA margin contracted 90bp YoY and flat QoQ at 18.2% (est 18.8%). Cost towards
commissioning Dunkin Donuts stores was INR18m for 1Q.
Tax rate remained flat at 31.9%.
JUBI opened 24 more Dominos stores in 1Q taking the total to 489 stores. It revised
the guidance of new store openings to 100 in FY13 from earlier 90. It has also
increased store presence from 105 cities to 110, which we believe, is positive for
operating leverage and economies of scale.
2
Jubilant Foodworks
Same store sales growth dips… at 22.3%
24 stores opened during 1QFY13
Gross margins flat YoY & QoQ; EBITDA margin up YoY, flat QoQ
Savings in staff and operating leverage boost EBITDA margins
Source: Company/MOSL
Valuation and view: Maintain our revenue and earnings estimates; valuations
rich; Neutral
We note that SSS growth has remained healthy however initial signs of tapering
off can be seen. Our estimates factor 23% SSS growth for FY13 and 20% for FY14.
 With increasing number of Dominos stores and Dunkin Donuts stores, we expect
the initial losses and overheads to increase. We remain positive on JUBI growth
on the back of strong brands like Dominos and Dunkin Donuts.
 However at 49.6xFY13 and 33.8xFY14 EPS we believe that the valuations are rich
and all the positives are priced in the stock. Neutral.
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26 July 2012
3
Jubilant Foodworks
Jubilant Foodworks: an investment profile
Company description
Key investment risks
Jubilant Foods is the master franchisee of Dominos Pizza
Inc in India with 50% market share of organized Pizza
market. The Company is the market leader in the
organized pizza market with a 50% overall market share
and 70% share in the home delivery segment in India.
JFL focuses on a home delivery and takeaway oriented
business model, which offers its customers the
convenience of eating in the comfort of their own homes
and workspaces. The company also holds master
franchise of Dominos in Sri Lanka, Nepal and Bangladesh.

Food inflation in likely to increase pressure on gross
margins as the company may be hesitant in taking
price increases so as to continue the category
expansion.
 The company targets to expand in Tier II and Tier III
cities; acceptance of Pizza as a food option in smaller
towns would be crucial in expansion plans of the
company.
Recent developments
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Key investment arguments
The company has been the franchisee of Dominos in
India for the last 15 years, and post the recent
renewal it would continue to be the exclusive
franchise for another term of 15 yeas (with an option
to extend for 10 more years).
 The company continues to expand its product
offerings (Choco Lava cake, Pasta, Butterscotch
mousse cake etc) to offer wide range of options to
its customers. We believe these add-ons are likely
to increase the average bill size.
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Comparative valuations
The company opened 24 stores during the quarter,
taking its total to 489.
Valuation and view
Our current EPS estimates stand at INR24 for FY13
and INR35.1 for FY14.
 We believe valuation at 49.6x FY13E and 33.8x FY14E
EPS seems to be fairly valued. Maintain Neutral.
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Sector view

We believe QSR as a segment holds immense
potential due to the unfolding demographic
dividend (Income distribution, age mix, working
women) and swift lifestyle changes among the
Middle Income class in Metros, Tier I and Tier II cities.
EPS: MOST forecast v/s consensus (INR)
Jubilant Foodworks Shoppers
P/E (x)
FY13E
49.6
34.2
FY14E
33.8
25.0
EV/EBITDA (x) FY13E
27.3
15.3
FY14E
19.0
11.9
EV/Sales (x) FY13E
5.1
1.1
FY14E
3.6
0.9
P/BV (x)
FY13E
18.9
3.9
FY14E
13.1
3.4
Titan
25.9
20.7
17.4
10.7
1.7
1.4
10.1
7.5
FY13
FY14
MOSL
Forecast
24.0
35.1
Consensus
Forecast
24.3
34.1
Variation
(%)
-1.0
2.9
Upside
(%)
-11.3
Reco.
Target price and recommendation
Current
Price (INR)
1,189
Target
Price (INR)
1,054
Neutral
Stock performance (1 year)
Shareholding pattern (%)
Jun-12
Mar-12
Jun-11
56.8
56.8
58.9
0.2
0.4
1.8
Foreign
38.2
37.9
33.5
Others
4.9
4.9
5.9
Promoter
Domestic Inst
26 July 2012
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Jubilant Foodworks
Financials and Valuation
26 July 2012
5
Jubilant Foodworks
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Jubilant Foodworks
No
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26 July 2012
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