India’s Jubilant Foodworks to expand overseas

MUMBAI (Reuters): Fast food chain operator Jubilant Foodworks, which runs the Dominos Pizza chain in India, hopes to foray into Bangladesh in one year and add two new stores in Sri Lanka in the coming months, its chief executive said.

Jubilant is the master franchisee for the Dominos brand in Sri Lanka, where it already has one store, alongwith Bangladesh and Nepal.

“We are in the process of identifying new partners for an entry into Bangladesh,” Ajay Kaul said on an earnings conference call.

The company, which signed a partnership agreement with U.S.- based Dunkin’ Donuts in February 2011, had said it plans to open its first store in the first quarter of FY13 in India.

Jubilant plans to open 100 Dunkin’ Donuts stores over 5 years in India and has chosen New Delhi as the location for its first store, Kaul said.

The company is setting up a new plant in the north Indian city of Noida, which will be operational by March, Kaul added, without providing any financial details.

India’s $13 billion quick service restaurant market is growing 25 to 30 percent annually, driven by a generation of young and increasingly wealthy consumers with an appetite for western tastes.

Earlier in the day, Jubilant posted a 55 percent jump in quarterly profit on robust demand and store launches, beating estimates and sending its shares up as much as 5.8 percent.

Markets also cheered Jubilant’s upward revision of its new store launch target to 85 stores from 80 in the current fiscal year .

The fast food chain operator opened 28 new stores in the December quarter, while its same store sales growth, a key gauge of profitability for retailers, stood at a robust 30 percent.

Jubilant recorded a net profit of 294.7 million rupees ($5.99 million) for the fiscal third quarter and its net sales grew 49 percent to 2.77 billion rupees.

Analysts had estimated a net profit of 272.5 million rupees, Thomson Reuters I/B/E/S showed.

Jubilant also revised up its annual capital expenditure estimates for the current fiscal year to 1 billion rupees from 700 million rupees earlier.

The company also said its planned manufacturing unit for Dominos in Chandigarh will be operational before June this year and its two units in Mumbai and Kolkata, which were being relocated, will be functional by the end of March.

Jubilant’s EBITDA (earnings before interest, tax, depreciation, amortisation) was 18.9 percent during the quarter compared with 17.4 percent in the previous year.

The company, which last raised prices of its offerings by 5 percent in November last year, does not plan any new hikes in the next 3-4 months.“The worst days in terms of pressure on input costs are behind us and we are hoping it will not be as much in the coming months,” Kaul said.

Shares in Jubilant, which the market values at $1.2 billion, ended 2.78 percent higher at 944.95 rupees in a firm Mumbai market.