Dolat Capital: Jubilant Foodworks - Increased Focus On Cost Control; Short-Term Hiccups Post Covid-19
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Dolat Capital Report
In its Annual report FY20, Jubilant Foodworks Ltd. continues to emphasize its five-pillar growth strategy -
1) fortress Domino’s in India, 2) elevate customer experienc e 3) sustained technology investments 4) build portfolio of brands 5) focus on international.
With a robust business model, efficient supply chain, large network, strong reputation for quality, hygiene and value, we expect Jubilant Foodworks to recover faster than peers in the near term.
During FY20, gross margins contracted 20 basis points to 75% due to high inflation in dairy prices. The company expects milk and cheese prices to soften mainly due to increased supply.
The company is focusing on converting manpower from fixed full/part timers to flexi timers. It is making good progess in rent negotiations and invoked the force majeure clause in several locations.
Moreover, it is also rationalizing selling general and administrative expenses, logistics and warehousing costs. We believe that these measures should help Jubilant Foodworks maintain Ebitda margin plus 20%.
During the Covid-19 outbreak, the company took several initiatives to ensure business continuity. Domino’s Pizza introduced Zero Contact Delivery to ensure the safety of both customers and the delivery staff.
It plans to launch Zero Contact Dine-in soon. The Company has partnered with FMCG majors to launch ‘Domino’s Essentials’ for delivering grocery essentials.
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