Result Update

09 t h January 11

Jubilant FoodWorks

Company Update

Key Take Away CMP Recommendation Rs 490 HOLD

Scrip Details Market Cap (Rs mn) P/E (x) FY13E Mkt Cap/Sales FY13E Equity Capital (Rs mn) Face Value (Rs) 52 Week High/Low (Rs) 31,528 25.4 2.8 644.4 10.0 672/160

Positive momentum continues, however margins witnesses pressure Jubilant FoodWorks Ltd. (JFL), maintained its high growth momentum once again with its topline expanding by 58.5% and PAT accelerating by 66.7%. Margins witnessed pressure due to rise in key input costs which were slightly offset by a price increase during the quarter. Its same store-sales grew by an exceptional 38.7% for 9mFY11, though the management has maintained that such high level of growth is unprecedented and not sustainable. We remain bullish on the prospects of Indian Quick Service Restaurant (QSR) space with JFL providing a good proxy to play on. At the CMP of Rs 490, the stock is available at P/E of 25.4x and EV/EBITDA of 14x its FY13E earnings. We maintain our HOLD recommendation. Result Highlights JFL reported good results for Q3FY11 with net sales expanding by 58.5% to Rs 1856 mn mainly led by same store-sales growth of 35.7% during the quarter, addition of new stores, increased same-store sales and new introductions to Domino's product portfolio. The Company implemented a ~2-2.5% price increase in November 2010. Same store-sales growth during Q3FY10 stood at 23.1%, while it was 40.6% in H1FY11. EBIDTA margins which stood at 17.4% (down 60 bps YoY) were slightly lower during the quarter due to raw material cost pressure (mainly cheese and chicken) which were only partially offset by the price increase during the quarter. Increase in personnel expenses (230 bps YoY to 20.7% of net sales) also contributed to margin pressure. Tax incidence has increased to 24.4% resulting in PAT growth 66.7% to Rs190 mn. The Company added 25 new stores during Q3FY11 which is the highest additions done in the last 3-4 years. The net new store additions so far this year has been 58 (including 2 sub franchised stores) and the management has affirmed that the target of 70 stores addition by FY11 is clearly on track. Total Stores as on 31 December 2010 stood at 364 (362 company owned + 2 sub franchised) covering 87 cities.
Highlights from conference call: The Company normally undertakes price increase of 2-2.5% twice in a year. This year, the food inflation has been higher than price increase. Sharp increase in milk prices have impacted prices of cheese which forms 34% of its total raw material cost. This year will witness a lot of sporting action which is expected to have a positive impact on the volumes. The tax rates expected for FY11 is 22-23% while for FY12, the Company is expected to pay full rates. Talks with international brands for a possible tie-up are currently on and the management expects some constructive action in this regard to happen during FY12.
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Website: www.dominos.co.in NSE Code JUBLFOOD Sensex 17,775 Nifty 5,313

Shareholding Pattern (%) As on December 2010 Promoters MFs, FIs & Banks FIIs Other Bodies corporate Public and others

61.3 9.6 21.1 3.0 5.0

Comparative Price Movement

Analyst: Nisha Harchekar Email: nishaharchekar@way2wealth.com Contact: 022 40192900

15/A Chander Mukhi, Nariman Point, Mumbai - 400 021. Tel: +91 22 4019 2900 email: research@way2wealth.com website: www.way2wealth.com

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Result Update

Q3FY11 Results Key Financials

Particulars (Rs, mn) Net Sales Other operational Income Total Oper. Income(TOI) Raw Materials Cons. % to TOI Stock adj.(-)Inc/(+)Dec Net Raw Mat adj. for stock % to TOI Purchase of traded goods % to TOI Rent % to TOI Other expenses % to TOI Contribution % to TOI Personnel % to TOI Total expenditure Operating Profit OPM (%) Non-Operating Income Interest Gross Profit GPM (%) Depreciation PBT PBT (%) Prov. for Tax Tax/PBT (%) Profit after Tax PAT (%) Equity Share capital EPS (Rs.) CEPS (Rs.) Q3FY11 1856.4 0.7 1857.1 407.7 22.0 -11.8 395.9 21.3 77.9 4.2 140.1 7.5 537.0 28.9 706.2 38.0 383.7 20.7 1534.6 322.5 17.4 6.4 0.1 328.8 17.7 77.9 250.9 13.5 61.3 24.4 189.6 10.2 644.40 2.94 4.15 Q3FY10 1171.4 2.2 1173.6 261.1 22.3 -2.14 259.0 22.1 30.9 2.6 101.6 8.7 369.4 31.5 412.8 35.2 215.7 18.4 976.4 197.2 16.8 0.3 20.8 176.6 15.1 62.3 114.3 9.8 0.55 0.5 113.7 9.7 596.22 1.91 2.95 % Chg. 58.5 58.2 56.1 449.1 52.9 152.2 37.9 45.4 71.1 77.9 57.2 63.6 2422.1 -99.3 86.2 24.9 119.6 9mFY11 4844.5 1.9 4846.4 1024.1 21.1 -13.6 1010.5 20.9 200.4 4.1 386.7 8.0 1417.8 29.3 1831.0 37.8 959.8 19.8 3975.2 871.2 18.0 10.0 3.4 877.8 18.1 210.3 667.5 13.8 140.7 21.1 526.7 10.9 644.40 8.17 11.44 9mFY10 2998.8 2.4 3001.1 652.4 21.8 -2.60 649.8 21.7 87.7 2.9 285.9 9.5 946.7 31.6 1031.0 34.4 559.7 18.7 2529.7 471.4 15.7 0.7 71.5 400.6 13.4 174.2 226.3 7.5 0.69 0.3 225.7 7.5 596.22 3.78 6.71 % Chg. 61.6 61.5 57.0 420.9 55.5 128.4 35.3 49.8 77.6 71.5 57.1 84.8 1303.9 -95.2 119.1 20.7 194.9 FY10 4239.3 2.4 4241.7 899.7 21.2 -5.5 894.3 21.1 155.3 3.7 396.9 9.4 1326.6 31.3 1468.7 34.6 804.6 19.0 3577.6 664.1 15.7 1.3 91.5 573.9 13.5 243.5 330.5 7.8 0.8 0.2 329.7 7.8 596.22 5.53 9.61

66.7 8.1 54.2 40.6

133.4 8.1 116.0 70.5

15/A Chander Mukhi, Nariman Point, Mumbai - 400 021. Tel: +91 22 4019 2900 email: research@way2wealth.com website: www.way2wealth.com

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Result Update

Financial Statements
Rs, mn

Revenues Total Expenditure Operating Profit Dep. & Amortisations EBIT Interest EBT Other Income PBT Tax PAT Revenue Growth % Op. Profit Growth % PAT Growth %

INCOME STATEMENT FY09 FY10 FY11E FY12E 2806 4239 6482 8785 2470 3573 5319 7133 336 666 1163 1652 169 243 287 347 166 423 876 1305 89 91 5 0 77 331 871 1305 4 4 12 0 81 335 883 1305 8 1 194 431 73 334 689 874 32.9% 51.1% 52.9% 35.5% 25.3% 98.4% 74.6% 42.1% -5.9% 357.5% 106.1% 26.9%

FY13E 11304 9048 2255 404 1851 0 1851 0 1851 611 1240 28.7% 36.5% 41.9%

BALANCE SHEET FY09 FY10 FY11E Equity Share Capital Reserves & Surplus Networth Total debt Capital Employed Gross Fixed Assets Net Fixed Assets CWIP Investments Current Assets Current Liabilities Net Current Assets Total Assets 582 -342 240 824 1064 1710 1065 87 0 336 399 -91 1064 636 526 1174 86 1260 2276 1403 25 0 533 663 -169 1260 643 1215 1858 0 1863 2871 1711 27 0 928 763 124 1863

FY12E 643 2016 2660 0 2665 3473 1966 61 0 1747 1036 639 2665

FY13E 643 3148 3791 0 3797 4045 2133 97 0 3014 1339 1566 3797

CASH FLOW Operating cash earning Depreciation Interest Change in WC Tax paid CFO Net Capex Net Borrowings Net Chg. in cash FCFE

FY09 83 169 86 -10 8 321 541 315 7 95

FY10 344 243 91 157 42 794 521 -719 37 -446

FY11E 883 287 5 -22 194 959 595 -86 273 278

FY12E 1305 347 0 62 431 1283 602 0 609 681

FY13E 1851 404 0 94 611 1738 572 0 1057 1166

EPS (Rs) P/E Ratio Book Value P/BV CEPS (Rs) Mcap/Sales EV/EBITDA Dividend % DPS Dividend Yield

VALUATION PARAMETERS FY09 FY10 FY11E FY12E 13.6 1.3 5.3 10.7 111.0 54.5 42.9 4.1 18.5 28.9 41.3 31.6 20.2 14.1 4.2 9.1 15.2 19.0 8.8 5.8 4.3 56.3 32.3 22.7 0.0% 0.0% 0.0% 10.0% 0.0 0.0 0.0 1.0 0.0% 0.0% 0.2%

FY13E 19.3 30.2 58.9 9.9 25.6 3.3 16.6 15.0% 1.5 0.3%

KEY OPERATING PARAMETERS (% of sales) FY09 FY10 FY11E FY12E FY13E Material cost 22.9% 21.1% 20.0% 20.4% 21.0% SGA 8.1% 7.3% 7.2% 7.1% 6.9% Rent 9.5% 9.3% 8.9% 8.8% 8.7% Personnel cost 19.8% 19.0% 19.8% 19.0% 18.5%

RATIOS Gearing (%) Current Ratio Inventory turnover Debtors (sale days) Asset Turnover RONW(%) ROCE(%) OPM (%) NPM(%) Eff. Tax Rate

FY09 FY10 FY11E 3.4 0.6 0.0 0.8 0.8 1.2 59.6 67.4 80.4 1.6 1.8 1.7 2.5 2.8 2.9 36.5 47.3 45.4 19.5 36.7 56.9 12.0 15.7 17.9 2.6 7.9 10.6 9.9 0.2 22.0

FY12E 0.0 1.7 83.8 1.5 2.8 38.7 57.6 18.8 10.0 33.0

FY13E 0.0 2.3 88.3 1.4 6.1 38.4 57.3 20.0 11.0 33.0

15/A Chander Mukhi, Nariman Point, Mumbai - 400 021. Tel: +91 22 4019 2900 email: research@way2wealth.com website: www.way2wealth.com

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Result Update

RESEARCH TEAM
K.N.Rahaman Jigisha Jaini Nisha Harchekar Sejal Jhunjhunwala Abhishek Kothari Krishna Reddy MSR Prasad Prateek Jain Ritu Gupta Aditya Agarwal Amrut Deshmukh Arun Kumar Rupali Prabhu Deputy Research Head Sr. Research Analyst Sr. Research Analyst Sr. Research Analyst Research Analyst Research Analyst Research Analyst Sr. Research Analyst Research Analyst Sr. Derivative Analyst Sr. Technical Analyst Technical Analyst Research Assistant Contact Equities & Commodities Capital Goods & Engineering FMCG, Hotels, Media Auto, Shipping & Metals Banking, NBFC & Financial Services Commodities, Economic Update Commodities Mutual Funds & Economic update Mutual Funds Derivative Strategist & Technicals Technical Analysis Technical Analysis - Commodities Database Management rahaman@way2wealth.com jigishajaini@way2wealth.com nishaharchekar@way2wealth.com sejal@way2wealth.com abhishekkothari@way2wealth.com krishnareddy@way2wealth.com Prasad.m@way2wealth.com prateek@way2wealth.com ritugupta@way2wealth.com aditya@way2wealth.com amrut@way2wealth.com Arun.Kumar @way2wealth.com rupali@way2wealth.com 022-40192900

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Result Update

DISCLAIMER
Analyst Certification: I, Nisha Harchekar, the research analyst and author of this report, hereby certify that the views expressed in this research report accurately reflect our personal views about the subject securities, issuers, products, sectors or industries. It is also certified that no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst(s), principally responsible for the preparation of this research report, receives compensation based on overall revenues of the company (Way2Wealth Brokers Private Limited, hereinafter referred to as Way2Wealth) and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations. Disclaimer This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. 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