st or’s Focus

Inve -Madhukar Das

Issue 10, Volume 1

Jubilant Foodworks
With crude price still in uncomfortable zone and ongoing political unrest in middle east causing tribulation -March 13, 2011
on world stock markets, the Japanese catastrophe would put more pressure with negative sentiment spread-
ing even more amongst the investors and traders. Other Picks
Fundamentally Speaking BUY :
Jubilant Foodworks is a Jubilant Bhartia group company. It holds the master franchisee rights for Domino's Grasim Industries
Pizza for India, Nepal, Sri Lanka and Bangladesh. The erstwhile Domino’s Pizza India Ltd was rechristened
in September 2009. It is the largest pizza retail chain in India and is one of the fastest growing fast food CMP—`2310
company with a countrywide network of over 339 retail stores. It is the market leader in the organized pizza
market with a 50% overall market share and 65% share in the home delivery segment in India. On February Target—`2500
24, 2011 Jubilant Foodworks announced the strategic alliance with "Dunkin' Donuts". Dunkin Donuts is the Stop Loss—`2200
largest coffee and baked goods chain in the world. The company has entered into a multiple unit develop-
ment and franchise agreement with Dunkin' Donuts Franchising LLC with exclusive rights to establish and
operate Dunkin' Donuts outlets in India. The Indian quick service restaurants industry is growing rapidly
with a 4X increase in the number of outlets between 2003 and 2009 as a lot of demographic and socio- Sell :
economic changes are driving the fast food market. Jubilant Foodworks is well positioned to benefit from Kinetic Engineering
these opportunities.
CMP—`120.10
The same-store-sales have been growing 18-20% annually for past 5 years however sales in first 3 quarters
have grown about 37% from same period last year. Net profit grew 67% in Q3FY11 and 137% in Q2FY11 Target—`109
which is indicative of growth coming from increasing number of outlets. So it would be conservative to
assume that Domino’s sales would continue to grow at 20% or more for the next 5 years and Dunkin Donuts
Stop Loss—`125
would bring in new cash flows. Trailing twelve month’s P/E is 55.7 which is somewhat rich however the
profitability ratios are a lot better than the industry average. The price to sales ratio is 8.3. It is a relatively
debt free company. Honda Siel Power
CMP—`374
Technically Speaking
Target—`340
Stop Loss—`390

The stochastic chart suggests
The weekly price chart is showing that the scrip has reached over-
a reversal of medium term down- sold region and has rebounded
trend which may result in retrace- and will retrace some portion
ment of previous decline. of its downmove.
The momentum chart has changed The commodity channel index
direction and may move above the reinforced the rebound of scrip
0 line if macro factors don't pull and suggested a short term
the market down. upmove.
Special points of
interest:
Since we are looking
at a trading horizon of
15-30 days, we shall
give more weightage
to technical analysis
and price trend of the
stock.
We shall also study the
fundamental aspects of
a company to avoid
getting into loss mak-
Recommendation : ing trade positions in
BUY case of movement of
market in direction
CMP : `545.50 opposite to that of my
prediction.
Target Price : `590
Stop loss : `520