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Informist, Monday, Feb. 10, 2025

By Rajesh Gajra

NEW DELHI – Revenue from new stores added in 2024-25 (Apr-Mar) till the end of December is likely to have helped Jubilant Foodworks Ltd.'s standalone top line growth for the December quarter stand in strong double digits on a year-on-year basis. On a like-for-like or same-store sales basis, for around 1,621 mature stores opened before the start of the current financial year, the on-year revenue growth is seen in low single digits due to weak demand.

The growth in profitability of the company, which in its standalone operations covers Domino's Indian outlets, is seen to be marginal for the December quarter against the same quarter the previous year. This is on account of food inflation and absence of operating leverage. The standalone bottom line growth for the December quarter will largely track revenue growth.

For the quarter ended December, Jubilant Foodworks' net profit is seen at INR 816 million on the back of revenue from operations of INR 17.00 billion, according to the average of the estimates of nine brokerages. The expected net profit is up 34% on year and 57% sequentially, while the estimated revenue is up 25% against the same period the previous year and 16% on quarter.

The net profit estimates range from a low of INR 614 million to INR 1.05 billion. The lowest estimate is by brokerage firm Elara Securities (India) while the highest is by Emkay Global Financial Services. Among revenue estimates, Elara's INR 15.09 billion is the lowest while Emkay's INR 21.53 billion is the highest. The earnings before interest, tax, depreciation, and amortisation of Jubilant Foodworks for the December quarter is pegged at INR 3.00 billion, according to the average of estimates by eight brokerage firms.

In the September quarter, the company's net profit had fallen 28% on year to INR 521 million, against a 9% increase in revenue at INR 14.67 billion.  

Jubilant Foodworks is a food service company from the quick service restaurants sector. It has franchise rights for three global brands – Domino's, Popeyes, Dunkin' – with their operations largely in India and the rest in Sri Lanka, Bangladesh, Turkey, Azerbaijan, and Georgia. The company also has two own brands, India-based Hong's Kitchen and Turkey-based COFFY. 

The outlets operated by the company, are dine-in ones and most of them also sell on online delivery channels, including the company's own app. Competition to Jubilant Foodworks in the quick service restaurants industry comes from companies such as Restaurant Brands Asia Ltd., formerly known as Burger King India Ltd., which has exclusive franchise rights to the Burger King brand in India and Indonesia, and on Popeyes brand in Indonesia. Devyani International Ltd. is another listed competitor with home-grown brands of Vaango, and the food street, and is a franchise in India to Pizza Hit, KFC, and Costa Coffee, brands.

Jubilant Foodworks' standalone financials largely covers its franchise operations in India. At a consolidated level, the company has subsidiaries registered in India, Netherlands, and Luxembourg. Most analysts track the standalone financials of the company.

Brokerage Sharekhan believes that quick service restaurants are likely to have faced "another soft quarter" in Oct-Dec, and their "like-for-like growth is expected to be muted due to weak demand environment and greater competitive intensity." In the case of Jubilant Foodworks, the brokerage expects overall standalone revenue, including sales from new stores added in last few quarters, to jump 59% on year.

"QSR (quick service restaurant) companies saw minor improvement in demand in 3Q (Oct-Dec), particularly at the quarter end, with volume-led SSSG (same stores sales growth) improvement," Motilal Oswal Financial Services said in a preview report. For Jubilant Foodworks, the brokerage, after modelling in 48 store additions during the December quarter and factoring in sales from new stores added in the previous two-three quarters, expects the company to report a 15% rise on year in revenue from operations. On a like-for-like basis, however, the brokerage estimates lower on-year growth of 8.5% in revenue.

On profitability, Motilal Oswal does not expect operating expenses to be any lower than the revenue and, therefore, expects the EBITDA margin to inch down to 20.7% from 20.9% in the year-ago quarter. In the September quarter, the EBITDA margin had contracted to 19.4% from 20.9%.

The brokerage expects some  non-operating metrics such as depreciation and tax costs of Jubilant Foodworks to be a drag on its bottom line. The brokerage expects the net profit, adjusted for exceptional items, to rie 21% on year, apart from a rise of 17% in depreciation costs and 19% in tax expenses.

The company will detail its December quarter financial results on Wednesday. Post the announcement of the results, investors will watch out for updates on domestic same store sales volume, new stores added, and the performance of subsidiaries operating overseas. The management's commentary on scaling up new businesses and sales from new Domino's India stories will be tracked closely.

On Friday, shares of Jubilant Foodworks closed 0.8% lower at INR 688.40 on the NSE. The shares are up 13% since Nov. 8, the trading day prior to announcement of the September quarter financial results by the company.

Following are the Oct-Dec standalone earnings estimates for Jubilant Foodworks based on reports from nine brokerage firms in descending order of estimate of net profit:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Avishek Dutta

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