Jubilant FoodWorks Q3 Review - LFL Disappoints, Leading To Ebitda Miss; Recovery To Take Time: Motilal Oswal

Motilal Oswal Report

Jubilant FoodWorks Ltd.'s sales and gross profit marginally missed our estimates. Weak operating leverage as a result of flat like-for-like (versus our expectation of 6%) led to Ebitda margin of 22%, versus our expectation of 24.5%, thereby leading to 14% miss on Ebitda.

Sameer Khetarpal, the new Chief executive officer announced his plans to focus on (introduction of Every Day Value Pizza at Rs 49), improving dine-in experience by re-imaging stores rapidly, introducing cost saving measures and building on the excellent response that they have received in their recently launched loyalty program (~10 million customers contributing ~40% of business in Dec-22). LFL growth recovery and material cost reduction are expected to take some time, putting pressure on near-term earnings.

Jubilant FoodWorks’ own delivery system, back-end advantages, robust balance sheet, and now the loyalty program all provide the company a competitive edge, leading to a healthy topline and earnings growth in the medium term.

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