Hold Jubilant FoodWorks; target of Rs 1392: Prabhudas Lilladher

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Prabhudas Lilladher's research report on Jubilant FoodWorks

We are cutting FY21 and FY22 EPS estimates of JUBI by 2.7% and 6.6% (43.3% and 22.1% cut on April 12) and rating from Accumulate to Hold with a target price of Rs1392 (Rs1490 earlier). Although encouraging 4Q SSG, benign input costs and near normal small town delivery sales are positive, we see near term headwinds from 1) closure of 30% stores with opening unlikely before Mid June 2) loss of dine in sales due to social distancing 3) lower store openings 60 in FY21 (80 earlier) as focus shifts to redesigning of old dine in stores. we believe dine in sales will be slow to recover given that mall/ high street based stores will be impacted by social distancing norms.

Outlook

We value the stock at 43xFY22 EPS and downgrade the stock to Hold. We would recommend fresh exposure at 10%-15% correction from current levels.

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