Have Popeyes rooster tenders made Jubilant FoodWorks mouthwatering?

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NEW DELHI: Dalal Road analysts have turned bullish on Jubilant FoodWorks, as they really feel profitable the franchise rights for Popeyes quick meals chain, well-known for its iconic rooster sandwich, spicy rooster and rooster tenders, provides the agency a brand new progress driver with a comparatively younger model and a big addressable market.

The corporate, which runs quite a few meals chains in India, acquired the grasp franchise rights for Popeyes — the world’s second-largest fast service rooster restaurant after KFC — in India, Bangladesh, Nepal and Bhutan.

“Popeyes can considerably enhance the addressable market measurement for Jubilant. The chain QSR rooster market measurement is estimated at greater than Rs 3,000 crore, through which KFC is a serious participant with Rs 2,000 crore in revenues. Just lately, Westlife Growth has additionally entered this area in South India,” mentioned Ashit Desai and Devanshu Bansal of Emkay World.

They, nevertheless, mentioned Popeyes is smaller and lesser recognized exterior the US, and Jubilant would wish to take a position strongly to ascertain the model and scale up the franchise in India.

Emkay World maintains a ‘purchase’ ranking on the inventory with a worth goal of Rs 2,750. The inventory traded 1.50 per cent larger at Rs 2,918 on Tuesday morning.

The corporate mentioned Popeyes, together with 4 different manufacturers that it manages – Domino’s, Dunkin’ Donuts, Hong’s Kitchen and Ekdum – would provide the agency value synergies and better bargaining energy for leases and retailer areas at meals courts.

CLSA additionally welcomed the deal. It maintained an ‘outperform’ ranking on the inventory with a goal worth of Rs 3,000, saying that the corporate is fast to deal with alternatives and is strategically reshaping the enterprise.

One ought to take into account that Covid severely impacted the revenues of QSR chains, together with people who Jubilant FoodWorks manages. Nevertheless, there was a restoration in latest months. With a resurgence in Covid circumstances, it must be seen how these chains cope up with the brand new realities.

Nihal Mahesh Jham of Edelweiss mentioned the important thing facets to evaluating Popeyes’ potential and worth would for Jubilant can be: one, monitoring any restaurant opening targets, just like Burger King India; two, royalty price and retailer economics for the model; three, menu localisation and extension plans.

“Led by Domino’s retailer growth potential (195 shops over FY20–23) and its sturdy anticipated similar retailer progress of 6 per cent common in FY20:23 and previous progress of 10 per cent throughout FY17–20, we estimate Jubilant to clock 11 per cent CAGR in income and 15 per cent in Ebitda over FY20–23,” mentioned Jham.

Edelweiss mentioned the inventory stays its prime decide within the QSR area and maintained a ‘purchase’ ranking with a worth goal of Rs 3,575 at 40 occasions anticipated June 2022 EV/Ebitda.

Another commentators mentioned lack of success in new codecs and types will be margin-dilutive and poses a danger to the inventory.



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