JUBILANT FOODWORKS

LIMITED
Case Study

27th December 2023

ABOUT THE COMPANY

Jubilant FoodWorks Limited (JFL), a part of the Jubilant Bhartia Group, is among India’s largest food service companies with a network
of 1,816 Domino’s Pizza restaurants (FY23). The company holds the master franchise rights for three international brands, Domino’s
Pizza, Dunkin' Donuts and Popeyes, addressing three different food market segments.
JFL has exclusive rights to develop and operate Domino’s Pizza brand in India, Sri Lanka and Bangladesh. The company also launched
its first homegrown brand – Hong’s Kitchen in Chinese cuisine segment. The company also dominates the pizza market in India with
~70% market share.
With a robust business model, an efficient supply chain comprising a strong network of certified supply chain business partners, and
countrywide presence, JFL is well-positioned to capitalize on a wide array of growth opportunities in the Food Service Industry (FSI). To
stay ahead of competition, the company is constantly working towards transforming processes and leveraging technology to enhance
its capabilities and simplify its operations.

CASE STUDY
ABOUT THE COMPANY
Jubilant Foodworks Portfolio
Particulars No of restaurants (as on 30th September 2023) No of cities (as on 30th September 2023)

India

Domino's Pizza 1,888 397

Dunkin Donuts 21 7

Hong's Kitchen 18 3

Popeyes 22 6

Sri Lanka

Domino's Pizza 50 ~18

Bangladesh

Domino's Pizza 23 1

CASE STUDY
ABOUT THE COMPANY

PRODUCT BREAK UP (FY23) DOMINOS STORE COUNT IN INDIA

3% 1% 1888
1816

1567

1335 1360
1227
23% 1134

73%

2018 2019 2020 2021 2022 2023 H1 FY24

Pizza Other manufactured goods

Beverages and Dessert Others

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GROWTH

SALES GROWTH
In FY23, the sales grew by 17.3% to ₹5,158.3 cr
driven by store expansion.
In H1 FY24, revenue increased by 5.7% YoY to ₹2,703
cr v/s ₹2,557 cr in H1 FY23.
It opened 50 new Domino’s stores (net) and 5 new
stores of Popeyes in Q2 FY24, taking the total to
1,888 Domino’s stores and 22 Popeyes stores. The
company continues to work on aggressive store
expansions. The number of Dunkin’ Donuts stores
stood at 22 while that of Hong’s Kitchen stood at 18
as of 30th September 2023.

5 Year CAGR: 11.3% CASE STUDY

GROWTH

EBITDA GROWTH
In FY23, EBITDA grew by 3.8% to ₹1,151.5 cr. The
company faced high inflation in the raw materials
used. Cheese, one of the key raw materials used has
reached extremely high price levels. However, other
commodities like fuel and oil have been witnessing
softening of prices.
In H1 FY24, EBITDA de-grew by 10.2% YoY to ₹553 cr
v/s ₹616 cr in H1 FY23. This was on the back on
higher employee cost and other expenses during the
period.

5 Year CAGR: 21.2% CASE STUDY

GROWTH

PAT GROWTH
Net profit for FY23 stood at ~₹379 cr. The decline of
11.5% was due to increased finance cost and
depreciation. Depreciation was higher than typical in
FY23 because accelerated depreciation was there on
two businesses that are being phased out, namely
Ekdum Biryani and Chef Boss. The opening of new
stores also led to higher depreciation.
In H1 FY24 PAT stood at ₹132 cr and witnessed a de-
growth of 44.8% YoY.
Share of loss from associates stood at ₹5.8 cr as
compared to profit of ₹5 cr in H1 FY23.

5 Year CAGR: 14.1% CASE STUDY

 GROWTH EDGE METER

An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating.
Since judgement on equity is subjective because different people will have different expectation from their investments, it
is better to study each aspect and give an individual grading to arrive at the final evaluation of a stock.

CASE STUDY
PROFITABILITY

EBITDA MARGIN
In FY23, EBITDA margin declined to 22.3%.
In H1 FY24, EBITDA margin further declined to 20.5%
as compared to 24.1% in H1 FY23 owing to increase
in raw material prices and employee benefit
expense. Gross margins declined by ~43 bps YoY to
76% in H1 FY24.
The goal is to enhance the EBITDA margin to a range
of 23%-24% over the upcoming 2-3 years.

CASE STUDY
PROFITABILITY

PAT MARGIN
In FY23, the PAT margin stood at 7.4% (v/s ~9.8% in
FY21).
In H1 FY24, PAT margin stood at 4.9% as compared to
9.4%. The decline was due to decrease in EBITDA
coupled with 25% YoY increase in depreciation and
15.2% YoY increase in finance cost.

CASE STUDY
PROFITABILITY

ROCE
Jubilant Foodworks has maintained a healthy ROCE
over the past few years. However in FY23, ROCE has
decreased.
ROCE was impacted (FY12-FY17) as the EBIT did not
grow as compared to the growth in capital
employed. However, the profitability improved
significantly since FY18.

CASE STUDY
PROFITABILITY

ROE
Jubilant Foodworks has generated a healthy ROE
over the past several years. In FY23, ROE fell due to
decrease in net profit and increase in net worth.

CASE STUDY
 PROFITABILITY EDGE METER

An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating.
Since judgement on equity is subjective because different people will have different expectation from their investments, it
is better to study each aspect and give an individual grading to arrive at the final evaluation of a stock.

CASE STUDY
EFFICIENCY

CASH FLOWS
The cash from operations for FY23 increased to
₹1,026 cr.
Cash outflows from investing activities stood at
~₹595 cr on account of increased investment in
property, plant & equipment and right-of-use assets
for store expansion.
Cash outflows from the financing activity stood at
~₹426 cr which is primarily led by repayment of lease
liabilities and distribution of dividend marginally
offset by an inflow on the back of proceeds from
long term borrowings.

CASE STUDY
EFFICIENCY

WORKING CAPITAL CYCLE

The working capital days of Jubilant Foodworks
continue to remain strong over the years. However it
increased by 37 days due to decrease in days of
payable.

CASE STUDY
EFFICIENCY

FREE CASH FLOW

In FY23, the company increased its spending on
capex significantly on account of new store
expansion.
During the year, the company made an overall capex
of ~₹770 cr on a cashflow basis. Of these ~₹250 cr
capex was on new Bengaluru commissary and the
remaining towards opening of new stores.
The planned capex for FY24 is ₹700-₹800 cr.
Management has maintained its guidance of opening
200-225 Domino’s stores and 30-35 Popeyes stores
in FY24.

CASE STUDY
EFFICIENCY

ASSET TURNOVER RATIO

In FY23, the asset turnover ratio remained stable.
The company continued to focus on technology,
automation, digitization to improve efficiency,
customer experience and agility.

CASE STUDY
 EFFICIENCY EDGE METER

An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating.
Since judgement on equity is subjective because different people will have different expectation from their investments, it
is better to study each aspect and give an individual grading to arrive at the final evaluation of a stock.

CASE STUDY
SOLVENCY

DEBT TO EQUITY
In FY23, it took additional debt of ~₹62 cr.
As on 30th September 2023, the company’s total
borrowings were ~₹186 crore. Total equity excluding
minority interest was ₹2,087 cr.

CASE STUDY
SOLVENCY

INTEREST COVERAGE RATIO

Jubilant Foodworks had a zero-debt status over the
years. However, in FY22 and FY23, it took a debt of
~₹120 cr and ~₹62 cr due to which, the interest cost
increased during the years.
The implementation of IND AS-116 in FY20, has led
to a recognition of interest in relation to the leases
(most of which is store space on lease).
Due to the accounting treatment, the company has
an interest cost of ~₹201 cr in FY23 and with an EBIT
of ₹690 cr. The interest coverage ratio stood at
~3.43x.

CASE STUDY
SOLVENCY

CURRENT RATIO
The current ratio in FY23 decreased as current assets
during the year decreased on the back of decreased
bank balance. Current liabilities such as lease
liabilities increased during the year.

CASE STUDY
 SOLVENCY EDGE METER

An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating.
Since judgement on equity is subjective because different people will have different expectation from their investments, it
is better to study each aspect and give an individual grading to arrive at the final evaluation of a stock.

CASE STUDY
VALUATION

PE RATIO
Currently, the stock is trading at a TTM based PE of
~159x.
Given the growth prospects of the business due to
aggressive store expansion, increased spending on
outside food and portfolio diversification, Jubilant
Foodworks is expected to continue to trade at rich
valuations.

CASE STUDY
VALUATION

DIVIDEND YIELD
For the year ending 31st March 2023, Jubilant
Foodworks has declared an equity dividend of ₹1.2
per share. The dividend payout ratio for FY23 would
be 22.4%.

CASE STUDY
VALUATION

KEY LEVELS
After moving in the range of ₹210-₹310 in the
calendar year 2018 and 2019, the stock broke out on
the upside in early 2020.

However, due to COVID it again retraced all the gains

and tested a low of ~₹230. Post this the stock
witnessed significant bullish momentum making a
high of ₹918 in Oct 2021, however post that the
stock has seen some cooling off.

The zone of ₹420-₹440 would act as a strong base

and can be used by long term investors for
accumulation. While on the upside a breach of ₹750
would be required for further legs to the rally.

CASE STUDY
 VALUATION EDGE METER

An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating.
Since judgement on equity is subjective because different people will have different expectation from their investments, it
is better to study each aspect and give an individual grading to arrive at the final evaluation of a stock.

CASE STUDY
QUALITY

MANAGEMENT
The highly experienced management of the company
remains focused on improving the customer
experience through continuous innovation, brand
building activities, new restaurant design and more.
The management has been able to strategically grow
the brand Dominos by having more split stores and
enhancing the digital assets.
The board approved the appointment of Mr. Sameer
Khetarpal as the Chief Executive Officer with effect
from 5th September 2022, post the resignation of Mr.
Pratik Pota.

CASE STUDY
QUALITY

SHAREHOLDING PATTERN
The promoter group holds 41.94% stake in the
company.

FII shareholding increased to 26.14% while DII

shareholding decreased to 22.35%. Non-Institution
shareholding decreased to 9.57%.

TOP PUBLIC SHAREHOLDING

UTI Flexi Cap Fund 2.76%

Kotak Flexicap Fund 1.65%
Franklin India Flexi Cap Fund 1.62%
Aditya Birla Sun Life Flexicap Fund 1.58%
SBI Life Insurance Co. Ltd. 1.56%
Life Insurance Corporation of India 1.36%
Government Pension Fund Global 1.28%

CASE STUDY
QUALITY

SECTOR POTENTIAL
• Jubilant Foodworks is engaged in the food service industry in India. The food service industry has witnessed significant increase in
the spending by the consumers due to factors like increase in disposable income, increase in delivery-based services, reduction in
the GST rates from 18% to 5% and increase in ease of online ordering.
• Ordering in has been an integral part of the eating experience as customers do not have to travel, wait-in line or compromise on
the food quality. While speed and convenience are the two major driving forces behind this shift in consumer behavior, technology
is the enabler making it happen.
• In the current scenario, the food service industry is expected to see a significant shift from the unorganized segment (~65%)
towards the organized segment (~35%) due to the increase in the awareness of hygienic products which is absent in most of the
unorganized segment. This would bode well for the Quick Service Restaurant (QSR) food chains like Domino’s to gain market share
in the long term.
• While the long-term prospects for the food service industry remains robust, in the near term there may be few restaurant closures
in the unorganized segment due to significant loss of sales for a prolonged period. In this situation, QSRs may gain more market
share due to quick and convenient delivery system and better brand penetration.

CASE STUDY
QUALITY

COMPETITIVE LANDSCAPE
Jubilant Foodworks is a leading player in the Quick
Service Restaurant segment which has occupied an
important position in the overall food & services
industry.
Domino’s has established itself as the undisputed
leader in the pizza segment, due to factors like first
mover advantage, rapid expansion, brand building
initiatives and innovative product portfolio. Westlife
development (McDonald’s), Devyani International Ltd
(Yum! Brands), Sapphire Foods India (KFC, Pizza Hut)
and Burger King are the closest competitor in the
QSR listed space.
Currently, Jubilant has entered the chicken which is
highly competitive and fragmented in nature. These,
in our view, might relatively increase the competitive
risk (v/s market leader in pizza market) for the longer
term.

CASE STUDY
QUALITY

FUTURE OUTLOOK
• Dominos being a delivery focused retail restaurant chain it is better placed during these times as compared to other players in the
food and services industry. Currently, the company is focused on growth and network expansion (from earlier focus on
maintaining margins) as the business has mostly recovered to it’s pre-Covid levels.
• The management has stopped providing the SSSG (same store sales growth) metric from Q3 FY22 onwards. It stated that Like-for-
Like (LFL) growth is a better reflection of real underlying growth, as SSSG would be high for the near term. By definition, LFL
growth refers to the year-over-year growth in sales for non-split restaurants opened before previous financial year.
• The company is on track to open 3,000 Dominos stores in the medium term, out of which it has opened up 249 new stores (net) in
FY23 bringing the total to 1,816 stores (currently 1888 stores). It would also ramp up the stores opening for ‘Popeyes’ since it
received enthusiastic response from its customers in Bangalore. In the ‘Hong’s Kitchen’, it would start store expansion post
improvements in the operational metrics.
• The company has launched regional menu as a part of their menu innovation strategy. Currently, they have launched new menus
in East India and Gujarat. They will continue to innovate and launch new menus.
• The company launched Mutton and Prawn Pizzas in India for the first time in Q2 FY24 which could be a driving growth for the
company in upcoming years.
• The company is planning to renovate over 100 stores in FY24. This reimaging initiative aims to drive increased foot traffic, elevate
LFL sales, and notably enhance the overall customer experience.
• They are the only QSR providing this service at around 143 railway stations. They deliver with Domino’s-like accuracy, taking orders
directly to passengers' seats on the train.

CASE STUDY
QUALITY

FUTURE OUTLOOK
• The company stake decreased in Hashtag Loyalty Private Limited from 37.68% to 31.66% as on 31st March 2023. It operates an
online food ordering platform – Thrive. It is a self-serve tool that allows restaurants in any part of the country to set up their own
direct ordering platform. It charges 3% per delivery and pickup orders, while ₹1 per order for table ordering.
• Jubilant Foodworks Ltd (JFL) acquired 100% equity stake in Jubilant Golden Harvest Ltd (JGHL) from Golden Harvest, during Q4
FY22. Jubilant Golden Harvest Ltd is a public limited company in Bangladesh and is a subsidiary of Jubilant Foodworks Ltd. It has the
franchise rights to develop and operate Domino’s Pizza restaurants in Bangladesh. This acquisition would help the company to
further consolidate its position in JGHL.
• As on 28th November 2023, the company holding in DP Eurasia N.V. stood at 53.52%. The DP Eurasia N.V. is the exclusive master
franchisee of the Domino’s Pizza brand in Turkey, Russia, Azerbaijan and Georgia.
• The company is looking to buy additional 45.5% in DP Eurasia N.V for a cash consideration of 73.4 million Euro.
• They have taken a decision to unwind Chefboss and scale down Ekdum! brand from Q4 FY23.
• The management remains focused on store expansion, specially for their brand ‘Popeyes’ and plans to open ~30-35 stores in FY24.

CASE STUDY
 QUALITY EDGE METER

An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating.
Since judgement on equity is subjective because different people will have different expectation from their investments, it
is better to study each aspect and give an individual grading to arrive at the final evaluation of a stock.

CASE STUDY
FINAL EDGE MATRIX

Growth Efficiency Valuation

TOTAL

3 + 3 + 3 + 5 + 3 + 3 = 20

Profitability Solvency Quality

CASE STUDY
 THANK YOU
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CASE STUDY
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CASE STUDY