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Motilal Oswal Report
Jubilant FoodWorks Ltd.’s Q1 FY21 results were weaker than expected, especially in terms of operating margins.
Depreciation and interest costs were also higher than anticipated. Nevertheless, recovery in system sales was sharp in July 2020 and August 2020 to 69.8% and 84.6%, respectively, of last year’s levels for the corresponding months.
Three events underpin higher growth and profitability for Jubilant FoodWorks beyond the Covid-19-impacted FY21:
1. the ongoing structural push toward delivery;2. the introduction of delivery charge; and 3. opportunity created by the crisis to close down 105 of its least profitable (and dine-in dependent) stores.
This would lead to all-time high Ebitda margins in FY22, resulting in 33% upward revision in our earning per share projections for FY22.
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