CRISIL reaffirms rating on Jubilant FoodWorks commercial paper programme

CRISIL has reaffirmed its 'CRISIL A1+' rating on the commercial paper programme of Jubilant FoodWorks Limited. The rating continues to reflect an established market position in the quick-service restaurant (QSR) segment, healthy operating efficiency driven by a robust supply-chain network, and a strong financial risk profile. These rating strengths are partially offset by the weaker performance of the donuts division (Dunkin Donuts) and susceptibility of profitability to competitive intensity and cost pressures.

The rating report further adds that the revenue growth is expected to be muted in fiscal 2021 due to the COVID-19 situation across the country, which has temporarily affected the normal operations (including dine-in) of the restaurants.

However, strong fundamentals for long-term QSR segment growth and established market position of the company is likely to see its operations normalising over the medium term. Additionally, the financial risk profile is supported by a debt-free status, strong net worth, and high financial flexibility. The company has been debt-free for the past three fiscals. The net worth was Rs 1,183 crore as on March 31, 2020, and is expected to increase further, backed by healthy accretion to reserves.

The stock closed at 1884.25, up by 0.25 per cent or Rs 4.75 per share. The intraday high is Rs 1909 and the intraday low is Rs 1866.75. Since the beginning of the year, the stock has given a return of 13.34 per cent thereby, outperforming S&P BSE 500 index, which gave a return of  -5.96 per cent.