Buy Jubilant FoodWorks; target of Rs 625: Motilal Oswal

Motilal Oswal's research report on Jubilant FoodWorks

JUBI reported 11% YoY standalone revenue growth in 2QFY27 (in-line). Domino’s LFL growth improved to 4.1% (2.5% in 1QFY27) despite a high base of 9%. Order growth was at 6.3%. Delivery revenue grew 11.3%, and DITA revenue returned to growth at 2.4% after a prolonged period of weakness. Popeyes continued its strong performance, with revenue growth of 122% and LFL growth of 53%. The company is targeting 5–7% Domino’s LFL growth in FY27, with 3Q performance currently on track to meet company plans. Gross margin expanded 110bp YoY to 75.5% supported by pricing, better mix, supply chain efficiencies, and lower wastage. Despite inflation in LPG, labor, cheese, oil, and chicken, a 140-200bp calibrated price increase and productivity initiatives limited the margin impact. EBITDA Pre-Ind AS margin expanded 10bp YoY to 12.4% (est. 11.9%), while EBITDA grew 12% (beat).

Outlook

The company is also progressing on margin recovery, with productivity gains, supply chain efficiencies, and calibrated pricing helping offset commodity inflation. We model standalone revenue CAGR of 13% revenue CAGR over FY26–28E and pre-Ind AS EBITDA margin of 12.5-13.5%. We reiterate our BUY rating on the stock with TP of INR625, valuing the India business at 27x EV/EBITDA and international business at 15x EV/EBITDA on Sep’28E estimates.