JUBLFOOD - Jubilant Foodworks Limited Share Price

In the Q3 FY26 earnings call, management provided a positive outlook, underscoring strong performance metrics and strategic initiatives. The company reported a consolidated revenue of Rs.24.4 billion, marking a year-on-year growth of 13.3%. Key highlights included a 20% rise in EBITDA and a 110 basis point improvement in EBITDA margins, reaching 20.5%. Management emphasized the importance of technological investments, which led to a 20% growth in monthly active users on their apps.

Looking ahead, CEO Sameer Khetarpal projected an annual like-for-like growth of 5% to 7% for Domino's India and overall standalone revenue growth target of around 15%. He also mentioned expectations of continuous improvement in profitability, with initiatives focusing on product innovation and calibrated pricing to support margins amid ingredient inflation.

Significant forward-looking points included:

1. Store Expansion: Plans to add approximately 1,000 stores in the next three years, contributing to the target of operating 5,000+ stores.
2. Popeyes Growth: Confidence in Popeyes becoming a strong growth driver with double-digit sustained same-store sales growth, with 5 additional stores added in Q3.
3. International Performance: Turkey's business is generating steady cash flows and covering acquisition-related debts solely through internal cash flows, having paid all interest obligations for three quarters.

Management also expressed optimism for the ongoing international expansion in Sri Lanka and Bangladesh, anticipating further top-line growth and profitability.

1. Question from Vivek M: "What is your outlook on the LFL number of 5% through 2026, considering the festive season shift and stiff base?"

   Answer: I believe Domino's should achieve 5% to 7% like-for-like growth and overall top line around 15%. We're already growing on a high base, as seen with our 15.1% growth rate over nine months. We're tracking market share gains in various categories, indicating significant potential for growth, and therefore, I foresee no major challenges in hitting our targets.

2. Question from Nihal Mahesh Jham: "What has been the incremental lever leading to operating leverage and how will the Labour Code affect employee expenses?"

   Answer: Our gross margin improvements primarily stem from better product mixes and strategic pricing. As for operating leverage, we have been disciplined in headcount and utilized technology for efficiencies. The Labour Code may have a minor impact, around 10-15 basis points, on our costs, but we don't expect any substantial shifts.

3. Question from Ashish Kanodia: "If the industry were to improve, could it lead to an upside risk on your LFL growth of 5-7%?"

   Answer: I agree that if the overall industry improves, we could surpass our 5% to 7% target, especially given our execution capabilities. We've consistently outperformed the market, and we're now focusing on expanding our stores and customer penetration, which enhances our growth prospects.

4. Question from Amit Sachdeva: "Is rental saving part of your margin equation, and what could Popeyes' contribution to future growth and margins be?"

   Answer: Yes, we're experiencing rental leverage due to better LFL growth and competitive negotiations. Popeyes is expected to add about 1%-1.5% to our overall growth as we optimize for daily sales and gross margins to match industry standards. In the medium term, I see Popeyes emerging as a significant growth player in our portfolio.