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Analyst Corner: Jubilant Foodworks now looking beyond Domino’s

jubilant fireworksBeyond Domino’s: In the final decade, JUBI has centered primarily on Domino’s and there was some effort to scale up Dunkin’ which met with restricted success.

The latest quarters have seen a collection of initiatives past ‘Domino’s’, together with FMCG, Biryani, Hong’s Kitchen ramp-up and 10.8% stake in Barbeque Nation. JUBI has now picked up a 32.8% stake in DP Eurasia, which has presence in Turkey & Russia amongst others, at engaging valuation. While this raises issues (volatility, bandwidth and so forth.), funding is small at Rs 250 crore and regardless of being the most important shareholder, there is not going to be line-by-line consolidation.

Beyond Domino’s: In the final decade, JUBI has centered primarily on Domino’s and there was some effort to scale up Dunkin’ which met with restricted success. In 2019, JUBI forayed into Chinese by personal model Hong’s Kitchen, which at the moment has 10 shops. During lockdown final yr, JUBI additionally expanded into FMCG by a variety of ready-to-cook and plans are underway to broaden into able to eat as nicely. In 2020, JUBI additionally forayed into Biryani beneath personal model, Ekdum!. The firm additionally picked up 10.8% stake in Barbeque Nation for `0.9 billion though that is purely a monetary funding, per administration.

DPE deal: JUBI has now picked up 32.8% stake in DP Eurasia (DPE) for GBP24.8m from Turkish Private Equity Fund II LP. DPE is listed on London Stock Exchange and based mostly on Bloomberg estimates, the deal valuations involves about <8x EV/Ebitda and <1x EV/Sales, a major low cost to JUBI’s personal valuations.

DPE is the unique grasp franchisee of the Domino’s Pizza model in Turkey, Russia, Azerbaijan and Georgia. It has a community of 771 shops, the majority of that are in Turkey (568) and Russia (190). Majority of DPE shops are sub-franchisee shops (550/771), whereas the remaining 221 are company-operated.

JUBI’s stake makes it the most important shareholder within the firm; regardless of this, the corporate wouldn’t be consolidating the goal asset on a line-by- line foundation. A comparability of JUBI FY20 vs DPE 2019. JUBI’s Domino’s shops are 74% increased than DPE complete shops though JUBI shops are 5.5 occasions DPE personal shops. JUBI’s revenues are almost twice of DPE revenues – the previous has seen income development at 8% CAGR vs. 4% for the latter in Indian rupee phrases over 2014-20.

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