Jubilant FoodWorks sees robust Popeyes momentum as supply-chain efficiencies support margins

Investment View and Key Takeaways

In its August 13, 2026 Q1 FY27 result update, Prabhudas Lilladher retained its BUY recommendation on Jubilant FoodWorks. The broker remains constructive, supported by a healthy near-term demand outlook, limited expected margin impact from inflation due to price increases, a superior product mix, supply-chain efficiencies and strong momentum at Popeyes.

Domino's performance remains healthy, although softer trends at Coffy amid intense competition partly offset this strength. DP Eurasia is improving operationally, but its profit after tax continues to be affected by hyperinflation accounting.

Q1 FY27 Standalone Performance

Jubilant FoodWorks' standalone Q1 FY27 revenue increased 9.2 per cent year on year to Rs 18,489 million, marginally below Prabhudas Lilladher's estimate of Rs 18,581 million. Domino's like-for-like growth was 2.5 per cent, in line with the broker's expectation.

Gross margin expanded to 75.5 per cent, ahead of the broker's 75.3 per cent estimate, supported by a better SKU mix and supply-chain efficiency. EBITDA margin improved to 19.5 per cent, although it was 30 basis points below estimate. The company added 58 net new Domino's India stores during the quarter, taking the India store count to 2,513.

Demand, Pricing and Margin Outlook

Management said Q2 FY27 demand momentum is better than in Q1 FY27 and reiterated its medium-term aspiration for 5-7 per cent like-for-like growth. Delivery revenue grew 12.1 per cent year on year, while average order value increased at a high single-digit rate.

Cost inflation of 200 basis points was mitigated through 140 basis points of price increases and 40 basis points of supply-chain efficiencies. Average orders per hour improved in Q1 FY27, although labour cost per hour rose.

Management retained its target of around 200 basis points of EBITDA margin expansion over FY24 adjusted EBITDA. Around 100 basis points is expected from Domino's, with the balance coming from emerging brands and operating leverage. Near-term margins may nevertheless remain volatile because of elevated food-input costs, manpower costs and overheads.

Popeyes and Store Expansion

Popeyes delivered more than 40 per cent like-for-like growth in Q1 FY27, with average daily sales exceeding Rs 95,000. Performance was driven by an improved mix and execution.

Management intends to build Popeyes into a Rs 10 billion brand over the next two to three years, opening 35-40 stores annually. Sites for the next 200 stores have been identified. Jubilant FoodWorks remains on track to open 1,000 stores across brands in India during FY26-FY28. FY27 capital expenditure guidance of Rs 7,500-9,000 million is primarily for store expansion.

International Business Performance

DP Eurasia revenue rose 28.2 per cent year on year to Rs 6,651 million, with a PAT margin of 6.9 per cent. Excluding the impact of MGL, DP Eurasia EBITDA grew 29.2 per cent and its margin improved by 15 basis points year on year. Management expects DP Eurasia PAT margin to be 7-9 per cent, although hyperinflation accounting continues to affect profit after tax.

Sri Lanka revenue rose 40.7 per cent year on year, while Bangladesh revenue increased 26 per cent year on year.

Financial Forecasts and Valuation

Prabhudas Lilladher expects margins to be broadly flat in FY27 amid higher input costs and overheads, followed by approximately 90 basis points of expansion over FY26-FY28. The anticipated improvement is expected to come from a higher average ticket size, supply-chain efficiency, technology investments and healthy like-for-like trends. The broker estimates standalone EPS CAGR of 32.8 per cent over FY26-FY28, from a low base.

The broker marginally reduced FY27E and FY28E sales estimates by 0.2 per cent, EBITDA estimates by 0.4 per cent and 0.3 per cent, respectively, and FY27E EPS by 2.1 per cent.

The sum-of-the-parts target price is Rs 574, reduced from Rs 576. This comprises Rs 506 per share for the standalone business, valued at 26 times FY28E EV/EBITDA, and Rs 68 per share for DP Eurasia, based on CY27 earnings.

Key Risks

• Persistent cost inflation.
• Higher labour and overhead costs.
• Weak Coffy trends amid intense competition.
• Hyperinflation-related effects on DP Eurasia profitability.