Good growth may justify Jubilant Foodworks valuations: Nirmal Bang
Nirmal Bang in its IPO note has said that though current valuations of on Jubilant Foodworks are steep, good growth in next few quarters may justify the valuations going forward.
By ET Bureau |
MUMBAI: Nirmal Bang in its IPO note has said that though current valuations of on Jubilant Foodworks are steep, good growth in next few quarters may justify the valuations going forward.
“Jubilant Foodworks is available at a P/E multiple of 35.46x & 38.08x FY10E (H1 FY10E annualized) at the lower and upper price band respectively on post issue capital, which looks expensive as compared to some of its peers. The growth in the first half results of the current years was exceptional when compared to last few years, which is a positive sign for the company but sustainability of such growth remains to be seen in the coming quarters.
The company looks all set to grow in the next few years with a huge number of new stores expected to open in next 2-3 years. However the current valuations look steep, though we believe a good growth in the next few quarter may justify the valuations going forward,” the report said.
Jubilant Foodworks issue comprises 2.27 crores equity shares of face value of Rs 10 in a price band of Rs 135 and Rs 145.
The issue size is Rs 306.45 crores at the lower price band and at the upper price band it is Rs 329.15 crores. The offer comprises a fresh issue of 4,000,000 equity shares by the issuer and an offer for sale of 18,670,447 equity shares by the India Private Equity Fund (Mauritius) and Indocean Pizza Holding Limited which are looking to exit the holding in Jubilant Foodworks. Post issue the holding of promoter will reduce to 62.19% from the current holding of 66.36%.
The company needs Rs 35 crores to prepay the term loan to Axis Bank and Central Bank of India out of the aggregate Rs. 117.17 crores to reduce the interest burden on the company by FY11. The proceeds will also be used to give exit to private equity partners viz., India Private Equity Fund (Mauritius) and Indocean Pizza Holding Limited.
“Jubilant Foodworks is available at a P/E multiple of 35.46x & 38.08x FY10E (H1 FY10E annualized) at the lower and upper price band respectively on post issue capital, which looks expensive as compared to some of its peers. The growth in the first half results of the current years was exceptional when compared to last few years, which is a positive sign for the company but sustainability of such growth remains to be seen in the coming quarters.
The company looks all set to grow in the next few years with a huge number of new stores expected to open in next 2-3 years. However the current valuations look steep, though we believe a good growth in the next few quarter may justify the valuations going forward,” the report said.
Jubilant Foodworks issue comprises 2.27 crores equity shares of face value of Rs 10 in a price band of Rs 135 and Rs 145.
The issue size is Rs 306.45 crores at the lower price band and at the upper price band it is Rs 329.15 crores. The offer comprises a fresh issue of 4,000,000 equity shares by the issuer and an offer for sale of 18,670,447 equity shares by the India Private Equity Fund (Mauritius) and Indocean Pizza Holding Limited which are looking to exit the holding in Jubilant Foodworks. Post issue the holding of promoter will reduce to 62.19% from the current holding of 66.36%.
The company needs Rs 35 crores to prepay the term loan to Axis Bank and Central Bank of India out of the aggregate Rs. 117.17 crores to reduce the interest burden on the company by FY11. The proceeds will also be used to give exit to private equity partners viz., India Private Equity Fund (Mauritius) and Indocean Pizza Holding Limited.
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