Recommendation : BUY
January 3, 2010.
January 3, 2010.
Debt/Equity of Jubilant FoodWorks Limited as of now has improved at 0.002 vs 0.05 as in March 2010 quarter, indicating an almost debt-free company. Reserves and Surplus have increased by 2% at 94.85 crores in the September quarter from 92.91 crores in the March quarter this year. Capital Employed has decreased by 3% to 121.92 crores in September quarter from 126 crores in March quarter due to decreasing Working Capital.
Income from Operations have increased by 67% to 163.38 crores in the September quarter from 97.75 crores in the corresponding quarter last year. Operating Profit Margins for the September quarter this year is at 18% as compared to 16% for the same quarter last year. The breakdown of Quarterly Financial Statements is given below.
If we compare things annually, Income from Operations in 2010 increased 51% to 423.93 crores from 280.6 crores in 2009. Operating Profit Margins were 16% for the financial year ending March 2010 as compared to 12% for the financial year ending March 2009. The breakdown of Annual Financial Statements is given below.
Return over Capital Employed (ROCE) for the current year ending six months is coming out to be 45% as compared to an ROCE of 53% in the whole financial year of 2009-10, which is commendable.
Cash Conversion Cycle (CCC) for the current year ending six months is coming out to be -185 days as compared to -161 days for the whole financial year ending March 2010, which is excellent.
Total Assets per Share of the company is coming out to be Rs. 24.89. Earning per Share of the company for the past four quarters is coming out to be Rs. 8.78. Current Price of the scrip is Rs. 643.60. Trailing P/E of the company is coming out to be 73.30.
Equity Section notes that the past losses on the Balance-Sheet are being covered quickly and the losses will be covered completely in the December quarter. After this, there will be significant increases in Revenue & Surplus, which can suddenly boost their expansion plans. Equity Section feels that this company can easily turn into a cash cow as they have negative Net Current Assets. Equity Section believes that Jubilant FoodWorks Limited has developed a strong brand equity and the current run of growth will continue for sometime, as they open more stores and consolidate sales growth from same stores. Their entry into Sri Lanka is beneficial for them. At the same time, it can't be denied the Current price of this stock is quiet costly both on the assets front as well as P/E front. Still, Equity Section issues a BUY rating on Jubilant FoodWorks Limited. Equity Section recommends this scrip for aggressive investors, especially.
Discalimer : Equity Section doesn't hold this scrip.
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