Foodtech ambition to drive future growth of Jubilant FoodWorks

Shares of, operating franchise stores of Domino’s Pizza and Dunkin Donuts in India, up 12% on Thursday following strong June quarter results and management’s ambition to transform into a food technology major. The higher interest in stocks ahead of the public listing of the food delivery service provider next week indicates a growing investor preference for the quick-service restaurant sector. QSR).

Jubilant management believes that domestic demand for QSR will increase rapidly with the possibility of closing 30-35% of conventional restaurants. This prompted the company to raise its target for store additions for fiscal year 22 to 150-175 from the previous 135 as it expects improved demand for larger, trusted brands. . It also said that the domestic market is likely to absorb 3,000 Domino’s stores compared with a previous estimate of 1800-2000 stores – the company currently operates 1,380 stores.

In the first quarter of fiscal year 22, it added 29 stores. Of these, 20 are Domino’s, the rest are Dunkin Donuts, Ekdum Biryani and Hong Kitchen. Focusing more on delivery in the event of new stores opening will reduce the initial investment. The company has ramped up its workforce in data science and artificial intelligence to become a giant in food technology.

In the June quarter, the company’s revenue more than doubled from a year-over-year low. Operating profit before interest, depreciation and amortization (EBITDA) rose to Rs 210 crore from Rs 24.1 a year ago. EBIDTA margins increased to 24% from 6% in the previous quarter. It also beat analyst estimates of 21%. In the near term, management does not expect rental costs to increase due to excess supply amid the pandemic.

Analysts expect the company to grow earnings by 55-60% over the next two years.

Its stock trades at 60 times estimated earnings for fiscal year 23. With its superior business model, management has been able to deliver a return on capital of more than 20% continuously for several years. last year except in fiscal year 21. With a cash balance of nearly Rs 600 crore, the company seems to be well positioned to take advantage of future opportunities. | Foodtech ambition to drive future growth of Jubilant FoodWorks


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