Jubilant Foodworks business recovered to 100%. The company reported revenue of Rs 1057 cr. Same store sales marginally declined by 1.7% (like-to-like same store sales growth [SSSG] stood at 1.4%). SSSG stood at 4.2% in November, but it declined by 2.9% in December, affected by localised lockdown. In January 2021, SSSG stood at 3.4% (like-to-like SSSG stood at 6.6%). Delivery channel and takeaway channel registered growth of 18.5% and 64.3%, respectively, during the quarter. Dine-in revenue recovered to 42% in Q3 (recovered to 57% in January 2021).

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Jubilant Foodworks Gross margin improved by 340 bps yoy to 78% mainly on account of benign input prices, lesser discounts by food aggregators, lower wastages, and Rs 30 delivery charges introduced during the quarter. Operating profit margin (OPM) expanded by 243 bps yoy to 26.4%, in line with our expectation of around 26%. The company added 57 new stores in Q3 (including 50 Domino’s stores, 2 Dunkin Donuts stores, 5 new stores of Ekdum! and Hong’s Kitchen). The launch of ‘Drive-n-Pick’ initiative is receiving encouraging response and would fuel growth of the take-away model.

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Jubilant Foodworks Ventures such as Hong’s Kitchen and Ekdum! are getting good response and fundamentals of both the businesses will be similar to Domino’s model with similar OPM. Increased trend of digital ordering (increased frequency of orders from existing customers and new customers ordering through the app), strengths of delivery model, recovery in dinning part of the business, and new store additions (expect around 40-50 stores per quarter) would help the company improve its revenue trajectory in the coming quarters.

Jubilant Foodworks Higher realisation per order, introduction of delivery charges of Rs 30 per order, lower wastages, and shifting to variable manpower model would help margins to remain high despite inflating input prices. As on Dec 31, 2020, liquid funds with the company stood at Rs 952 cr, improving from Rs 828 cr in Sept 2020.

Jubilant Foodworks Key positives:

India business recovered to 100% in Q3 and grew by 6% in Jan 2021, with growth delivery and takeaway staying upwards of 15% and 60%.
Online ordering to delivery sales stood at 98.2%; downloads of mobile ordering apps stood at 51.2 million, the highest in the past few quarters.
Encouraging response to new ventures such as Hong’s Kitchen and Ekdum!; large focus on adding few stores in Delhi NCR region

Jubilant Foodworks Key negatives:

Dine-in store sales recovered to just 57% of pre-COVID level in January 2021

Jubilant Foodworks Key Risks:

Any significant decline in delivery/takeaway sales due to enhanced competition or localise lockdown due to increased cases in the coming quarters would act as a key risk to our earnings estimates in the near to medium term.