朱庇特食品公司（JUBI）：朱庇特食品公司（JUBI IN）：评级下调至减持，食品性价比高，股票价格昂贵

EquitiesHotels Restaurants & Leisure Jubilant Foodworks(JUBI IN) DowngradetoReduce:Good value food, expensive stock India ◆Q4 results were strong,with India business growing sales andEBITDA by 19% and 20%; Dominos LFL came in at 12.1% DOWNGRADE TO REDUCE TARGET PRICE(INR)PREVIOUS TARGET(INR)600.00570.00SHARE PRICE(INR)UPSIDE/DOWNSIDE693.55-13.5%(as of15 May 2025) ◆Growth not accompaniedby margin improvement, however.Dominos India margins at 14.5% (16.4% inFY19) ◆Downgrade to Reduce (from Buy); INR600 TP (from INR570)on valuation,even after buildinginmargin improvement 4QFY25 results were strong:1)JubilantFoodworks (JFL) standalone sales grew by+19%yoy while EBITDA grew by 20% yoy with15bps margin expansion in spite ofan over 200bps decline in grossmargins due to operatingleverage benefit.StandaloneEBITDAof INR3.05bn was +3% above consensus. Net profit grew by+31% yoy and was +18% above consensus.2)Like-for-like (LFL) growth forDominoscame in at12.1% (vs.12.5% in Q3)driven by Delivery LFL growth of21.9%.3)Growth was led bystrong order growth of 24.6% yoy.4)Network rolloutcontinues apace with 40 net new Domino’s storesin India,and3new Popeyes stores(61total, spanning across 23 cities).5)Overall, it wasa strongquarter. Takeawaysfrommanagementcommentary:Improvement in Domino’s marketshare is structuralin nature as competition might not be able to replicate JFL’scertain key attributes like delivery infrastructure, product innovations andculture, asper management.Discounting has come down and was a tailwindin Q4.The chickenwingsnew product launchhas been doing well.Chicken consumptionis higher inEast and SouthIndiaandJFLtargetstomake the chicken platform(includingthepizza business) aINR10bn revenuebusiness over the medium term.The companytargetsat least 200bps consolidatedEBITDA margin improvementbyFY28vs FY24. Downgrade to Reduce;TP INR600:JFL’sinitiatives towards market share gainhave been commendable and reflect in theover12%LFL growth for H2FY25 whenseveral competitorshave barely managed to report positive LFL growth. However,the initiatives arenothaving acommensurateimpact on margins, which at 14% forDominos India (12% for standalone),arestill much lower than the 16-18%rangeseen during FY22-23, despite much higher SSSG.We change our valuation to SoTPbased vs DCFbefore. We apply a 32x EBITDA multiple to our pre-IND AS FY27eEBITDA of c.INR11.5bn to yield a rounded per share fair value of INR560/share. Weseparately value DP Eurasia at INR40 / share based on aPEmultiple of 20x, broadlyin-line with the trading multiple for Domino’s Pizza (DPZ IN, Buy, CMP USD 483.23).Our blended TP of INR600 (from INR570) implies 13.5% downsidetocurrent shareprice and we downgrade to Reduce (from Buy) ratingas valuations are expensiveand earnings could surprise on the downside,as we are already building in a highermargin improvement than whatthecompany is expecting. Nihal Mahesh Jham*, CFADirector and Consumer Analyst HSBC Securities and Capital Markets (India) Private Limitednihal.m.jham@hsbc.co.in+91 22 66283771 Pratik Gothi*Analyst, India Consumer & Retail ResearchHSBC Securities and Capital Markets (India) Private Limitedpratik.gothi@hsbc.co.in+91 80 6737 3929 Nupur Vyas*Associate, India Consumer & Retail Research HSBC Securities and Capital Markets (India) PrivateLimitednupur.vyas@hsbc.co.in+91 22 40891584 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and isnot registered/ qualified pursuant to FINRA regulations With this report, NihalMaheshJham assumes primary coverage ofJubilant Foodworks. HSBC Global Research Podcasts| Listen to our insightsFind out more Issuer ofreport:HSBC Securities and CapitalMarkets (India) Private Limited Disclosures & DisclaimerThis report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it. View HSBC Global Research at:https://www.research.hsbc.com Financials & valuation:Jubilant Foodworks Source: HSBCNote:Priced at close of15 May 2025 With presence in 475 cities in India Domino's India total stores Presence in 54 newcities over FY25 vs 28cities in FY24 Domino’s is now a 2,179-store franchise inIndia in FY25; guidance of 250 new stores inFY26 and ambition of over 3,000 stores byFY28 Key takeaways from management commentary Q4FY25: ◆Management highlighted that discounting has come down and wasin fact atailwindin Q4.◆On growth, management commented that growth across Tier I to Tier IV cities is similar.◆On the emerging brands, management highlighted thatlosses in Dunkin and Hong’sremains high. Domino’s India: ◆The initial introduction ofadelivery waiver led to loweraverage ticket value (ATV).However, that has started recovering.◆The improvement in Domino’s market share is structural driven by 1)focus on delivery;2) menu innovation and backed by strong media investments;3) moving from 4regionsto 7regionsoperating clusterhasalso aided.The companyis contemplating s