With A Growing Food Industry, Buy This Stock For 28% Upside: Motilal Oswal

Within the Indian Food Service Industry (FSI), organized players are growing faster than the industry. The contribution of the organized FSI players surged to 38% in FY20 from 29% in FY15 and is expected to see its share increase to 50% by FY25E. Renowned brokerage firm Motilal Oswal has recommended investors to buy stocks of Jubilant FoodWorks with a potential upside of 28%, within a target period of 1 year.

Target Price

The Current Market Price (CMP) of Jubilant FoodWorks is Rs. 3792. The brokerage firm, Motilal Oswal Recommends has estimated a Target Price for the stock at Rs. 4850. Hence the stock is expected to give a 28% return, in a Target Period of 12 months.

Stock Outlook
Current Market Price (CMP)	Rs. 3792
Target Price	Rs. 4850
1 Year returns	28.00%

Company performance

Jubilant FoodWorks's sales stood at Rs. 11.3 b, in FY 21. In the same fiscal, the company's revenue was Rs. 32,689 million, EBITDA was Rs. 7,666 million, while, PAT stood at Rs. 2,337 million. QSRs are in a sweet spot for rapid growth over the next 5-10 years in India. The company's operating profit is expected to grow, with 25-30% CAGR for several players. Domino's is the most efficient among them.

Comments by Motilal Oswal

Maintaining a buy rating, Motilal Oswal said, "Enhanced opportunity for QSRs in India due to Covid, driven by 3 shifts towards trusted brands, delivery, and technology. It has also strengthened its technology and delivery moats by efforts on its app. It has the best Balance Sheet and a consistently high RoCE of over 20%."

About the company

Jubilant FoodWorks holds the master franchise rights for 3 international brands, Domino's Pizza, Dunkin' Donuts, and Popeyes addressing 3 different food market segments. The Company launched its first homegrown brand - Hong's Kitchen in the Chinese cuisine segment and has also begun offering a brand-owned ready-to-cook range - 'ChefBoss'.

Disclaimer

The above stock was picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.