Three key things for Jubilant Foodworks to get to $10 billion market cap by FY30

Bernstein has set the target price at ₹700 for Jubilant Foodworks’ shares, which means it sees a potential upside of 9% from the closing stock price of November 28.

The brokerage is of the view that for Jubilant to achieve a market capitalisation of ₹80,000 crore by FY30, it needs to do three critical things, which include:

-Turkey business: According to the brokerage, the company’s Turkey business needs to deliver nearly 12% revenue compound annual growth rate (CAGR) and nearly 15% profit. The sum of CAGR and profit for Turkey’s business should be 27%, it said.

-India stores: Bernstein expects Domino’s India store additions to be a key revenue driver for Jubilant Foodworks. The brokerage estimates that 170 Domino’s store additions per year are required to get to almost 3,100 stores by 2030.

-Stores growth and EBITDA measure: The brokerage believes that the sum of Domino’s India LFL or like-for-like stores and Pre-Ind AS Corp EBITDA should be 19%. (Pre-Ind AS EBITDA is the sum of a company’s normal EBITDA from the profit and loss statement and the payment of lease liabilities from the cash flow statement.)

Bernstein’s brokerage note came weeks after the company’s Q2 results. On a year-on-year basis, the company’s net profit, margin and sales per store have taken a hit.

At the same time, Jubilant Foodworks’ like-for-like (LFL) sales growth for the quarter in a challenging market left the brokerages divided then, with their ratings ranging between buy and underperform, and target prices in the range of ₹445 and ₹620.

(Brokerage rating and target in the above table are as of November 11)

The company which operates Domino’s in India reported a 2.8% like-for-like sales growth for the July to September quarter, primarily driven by 11.4% growth in the delivery segment. The group recorded system-wide sales of ₹2,271.9 crore, supported by a network expansion to 3,130 stores with a quarterly addition of 73 stores.

Also Read: Domino’s delivers as India wants to order-in but the shift is impacting margin, say analysts

The overall revenue from operations reached ₹1,954.7 crore, a 43% increase from ₹1,368.6 crore in the same quarter last year. Standalone revenue was ₹1,466.9 crore, up 9.1% year-on-year (YoY), with EBITDA rising slightly to ₹284.2 crore, maintaining a margin of 19.4%, though down 150 basis points.

However, rising costs impacted profitability. The profit before tax dropped to ₹87 crore from ₹120.5 crore, mainly due to increased costs, which rose to ₹1,895.7 crore from ₹1,290.2 crore. Employee benefits expenses surged to ₹336.8 crore, up from ₹259.4 crore, and depreciation costs climbed to ₹201.4 crore from ₹141.9 crore. The cost of raw materials rose to ₹408.3 crore.

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