Emkay recommends Jubilant FoodWorks for target of Rs 298/share
Emkay Research has initiated coverage on recently listed Jubilant FoodWorks with a ‘BUY’ recommendation.
By ET Bureau |
MUMBAI: Emkay Research has initiated coverage on recently listed Jubilant FoodWorks with a ‘BUY’ recommendation. The brokerage has set a target price of Rs 298 per share on the stock, an upside of over 20 per cent from CMP.
“Jubilant FoodWorks, the master franchisee for 'Domino's' brand in India, Nepal, Bangladesh and Sri Lanka is likely to dish out a VFM recipe for investors in the years to come. Given the strong growth prospects of the QSR segment in India and Domino's well entrenched business model, we are confident that JFL will sustain its revenue growth momentum and grow at 38.7% CAGR during FY09 - FY12E.
We expect the APAT to also grow at a healthy 100.0% CAGR during the same period. Apart from market leadership in the pizza segment and its strong outlet network, we believe that the ability of its business model to generate free cashflows and gain significant operating leverage is the true value clincher. We expect its cashflows to grow at a 67.3% CAGR over FY09 - 12E.
Given our positive bias on its cash flow generation, we have deviated from widely used valuation tools like PER, EV/EBIDTA and valued it on P/OCF. We recommend a BUY on the stock with a target price of Rs 298/share (12xFY12E OCF),” the report said.
“Jubilant FoodWorks, the master franchisee for 'Domino's' brand in India, Nepal, Bangladesh and Sri Lanka is likely to dish out a VFM recipe for investors in the years to come. Given the strong growth prospects of the QSR segment in India and Domino's well entrenched business model, we are confident that JFL will sustain its revenue growth momentum and grow at 38.7% CAGR during FY09 - FY12E.
We expect the APAT to also grow at a healthy 100.0% CAGR during the same period. Apart from market leadership in the pizza segment and its strong outlet network, we believe that the ability of its business model to generate free cashflows and gain significant operating leverage is the true value clincher. We expect its cashflows to grow at a 67.3% CAGR over FY09 - 12E.
Given our positive bias on its cash flow generation, we have deviated from widely used valuation tools like PER, EV/EBIDTA and valued it on P/OCF. We recommend a BUY on the stock with a target price of Rs 298/share (12xFY12E OCF),” the report said.
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