Jubilant FoodWorks hits new high, surges 35% in a month on growth prospects

The financial risk profile is supported by a debt-free status, strong net worth and high financial flexibility

Shares of Jubilant FoodWorks (JFL) hit a new high of Rs 4,166.40, up 7 per cent on the BSE in intra-day trade on Wednesday on strong growth prospects. In the past one month, the stock of the quick-service restaurant (QSR) company has rallied 34 per cent following a good set of numbers for the quarter ended June 2021 (Q1FY22). In comparison, the S&P BSE Sensex was up 5 per cent during the same period.

For Q1FY22, JFL reported a consolidated net profit of Rs 69.06 crore, aided by higher revenues despite the second wave of Covid-19 disrupting operations. It had posted a consolidated net loss of Rs 74.47 crore in the same quarter last fiscal. Ebitda (earnings before interest, taxes, depreciation, and amortisation) margins remained unchanged at 24.1 per cent in Q1FY22 as against 24.3 per cent in Q4FY21.

Its revenue from operations in the first quarter stood at Rs 893.19 crore as compared to Rs 388.41 crore in the corresponding period last year when operations were also disrupted by the outbreak of the pandemic. With vaccinations well underway, the management believes the worst is behind them and is confident of delivering strong, sustained growth in the periods ahead.

JFL’s revenue growth was muted in fiscal 2020 due to the Covid- 19 situation across the country which has temporarily affected the normal operations (including dine-in) of the restaurants. However, in FY2021, JFL saw sales recovery reaching FY2020 levels in Q32021 and registered healthy growth in Q42021 on a quarterly basis.

The financial risk profile is supported by a debt-free status, a strong net worth, and high financial flexibility. The company has been debt-free for the past three fiscals. The net worth of the company was Rs 1,497 crore as of March 31, 2021, and is expected to increase further, backed by healthy accretion to reserves.

The rating agency CRISIL Ratings on August 10, 2021, reaffirmed its 'CRISIL A1+' rating on the commercial paper programme of JFL. "The rating continues to reflect an established market position in the QSR segment, robust supply-chain network, supportive changes in the operating environment and a strong financial risk profile. These rating strengths are partially offset by the concentration of profitability to Domino’s Pizza and susceptibility of profitability to competitive intensity and cost pressures," CRISIL said. CLICK HERE FOR MORE DETAILS

JFL is India’s largest food service company. Its Domino’s Pizza franchise extends across a network of 1,380 restaurants in 298 cities. The company has exclusive rights to develop and operate Domino’s Pizza brand in India, Sri Lanka, Bangladesh and Nepal. It also enjoys exclusive rights to develop and operate Dunkin’ Donuts restaurants in India. JFL has ventured into the Chinese cuisine segment with its first owned restaurant brand ‘Hong’s Kitchen’.