Jubilant Foodworks Ltd IPO Message Board (Page 11)

NSE SITE NOT SHOWING JUBILIANT FOODWORKS BIDDING INFORMATION NOR THE ISSUE OPEN DETAILS

LATEST GMP

JUBILIANT 32-33
AQUA LOGISTIC 18-20
INFINITE 42-44
BIRLA SHLOKA "DISCOUNT"

HAPPY INVESTING

N E W I P O - D E C L E A R E D

AQVA LOGISTICS

OPEN 25 - 28 JAN

PRICE Rs.220-230.

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FROM AK57

Even if one were to discount the growth potential and the India Growth story, valuations on any matrix are stretched and leave nothing for the investor to look forward to. The mere fact that the last three listings in the first week of January in the form of JSW Energy, Godrej Properties and DB Corp have done well is no justification for such pricing.

Conclusion

The name of JFL was recently changed from its earlier name of Domino’s Pizza India Limited. This change in name will allow the company to explore the possibility of bringing other international food chains to India or pursuing other related food activity in India. This name change allows this possibility, and having an experience of over a decade in India, and currently running almost 300 stores this becomes a great advantage. JFL is a niche player and would allow a proxy play on the fast growing India story. Currently there is optimism in the Indian markets and looking at the huge response that was generated in the last IPO of Infinite computer Systems, this issue may also do well. The over subscription in the HNI category plays an important part in the grey market premium and that could provide retail investors with a listing gain.

I believe there is a very large pipeline of IPO’s in the offering and one must pick and choose where one needs to apply for the long term. This issue has brand recall simply because it is a national food chain and has advertisements on television. The product it sells is in the higher category, the issue is aggressively priced and there are high risks involved. Apply only if you have an appetite for high risk and if listing gains are available one must exit to relook the company later on.

Investment rationale FROM FINANCIAL EXPRESS
Typically, it takes 3-4 years for JFL to achieve positive cash flow for every new store it opens. Since it was in the early stages of growth, JFL incurred net losses up to 2004-05; accumulated losses totalled Rs 62 crore as on September 2009. Positively, this has helped the company reduce its tax-outgo in recent years.

Notably, despite the significant growth in operational size, the emphasis on operational efficiency and the ability to pass on the rise in raw material prices to end-customers, have helped the company to maintain its operating margin at around 12 per cent historically (last four years); these were up at 16 per cent in the recent six months.

Interest costs, however, have been a bane for the company. In 2008-09, net profits took a hit of 13 per cent to Rs 6.7 crore in 2008-09 as interest costs jumped. In the first six months, too, interest costs have come higher at Rs 6.6 crore (up 35 per cent on an annualised basis). Out of the IPO proceeds of Rs 58 crore, the company intends to repay term loans worth Rs 35 crore that would help profitability, going ahead.

In terms of valuations, even at the lower price-band of Rs 135, the stock trades at a P/E of 35.8 times its annualised 2009-10 earnings. While there are no comparable listed companies in India, globally, Domino’s UK, Domino’s USA and Papa Jones are trading in the range of 13-21 times their CY2010 earnings. Hence, the offer looks stiffly priced in the near-term, even after considering JFL’s dominance in the business. Investors with a two-three year perspective may invest.

I will apply my 8 full applications thought ASBA Tomarow. I thing rs 50000 to 1 lakh profit conform.

The shares of PSU companies have been very very lucrative . The success of IPO/FPO of PSU have been outstanding comparing with private companies which are only for earnings money and taking out from pockets of retailers. Take any PSU all have been sucessful eg.
ntpc , REC IPO rate 62, 105 present rate 230 , 265 like wise others also. I consider these (PSU) as very good investment .

Microsec Capital:

The brokerage house has recommended a `SUBSCRIBE` to the issue for the purpose of listing gains. It also however notes that the issue is a bit expensive as compared to its peers. The valuations and justification provided by the brokerage house are as under:

At the upper price band of Rs 145, Jubilant is priced at 34.8x times of its FY2010 diluted annualized Earnings per Share (EPS) of Rs 4.16. However, based on FY09 diluted EPS, it is at a P/E of 125 x at the upper price band. Other global players like Domino`s, Papa John`s and Mcdonald`s are quoting at FY 2010E P/E of roughly 12-14x and at a 3-year average P/E of 13-18x.

SMC:

Brokerage firm SMC has given 3.5 rating to the IPO indicating the issue is good. The valuations and justifications provided are as under:

The stock trades at a P/BV of Rs.23 on the lower side of the band and 24.73 on the higher side of the band of its quarter ending Sep09 book value Rs.5.86. Looking at the post issue valuation, the stock trades at a P/BV of Rs.9.24 on the lower side of the band and Rs 9.92 on the higher side of the band of its post issue book value of Rs.14.61. Considering the P/E valuation, the company is trading at a P/E of 33.27x times on the lower side of the price band and 35.73x times on the higher side of the price band of its annualised H1FY`10 EPS of Rs.4.06. Looking at post issue valuation, the company is trading at a P/E of 35.50x times on the lower side and 38.13x times on the higher side of its post issue annualised H1FY`10 EPS of Rs.3.80.

Emkay Research:

The brokerage house has recommended a `SUBSCRIBE` on the IPO and has stated that the public issue can be opted for with an aim of lucrative listing and strong medium-to-long term gains.

JFL is amongst few companies to get listed in the food-service industry; hence there is no like-to-like comparison. We expect a scarcity premium to be assigned by investors for short-to-medium term- just as it happened in public offerings of Page Industries, Mahindra Holiday Resorts, etc. JFL is rolling its maiden public offering at Rs 135- 145 a share - at a valuation of PER of 107X-115X FY09 earnings and 34X-37X FY10E earnings (annualized for H1FY10). We believe that direct comparison with valuations of listed peers in the international space like Papa Jones, Domino`s, etc is not appropriate? since the growth potential and operating parameters are completely different. Further, JFL offering looks expensive on preliminary screening tools like PER at 34X-37X FY`10E- hence on should look beyond these preliminary screening tools.

We are impressed by the cash generating ability of business model - and its ability to grow stupendously on internal accruals. We are impressed by the self sustaining model with cash break, even of less than 4 years, operating cash flow of Rs 1.5 million for each outlet against capital expenditure of Rs5 mn per outlet. Also, the business model offers tremendous scope for operating leverage- promising expansion in operating margins and return ratios in ensuing years. Thus, valuations of 11X FY10E annualized operating cashflow is relatively cheap versus consumer companies trading at average price to operating cash flow of 25X FY10E (annual cashflows).

The only difference in two business models is extent of cyclicality and competition (relatively higher in QSR business against traditional consumer business) ?for which JFL is available at 56% discount to consumer companies. Thus, valuations are extremely attractive making it a candidate for lucrative listing gains and strong medium-to-long term gains. We hold a positive bias recommend `SUBSCRIBE

Despite the positive picture presented by JFL, there are a good many risks. For one, with a good portion of the offer proceeds not flowing into the company, should debt be taken on in the future to fund expansion, it could reduce margins and constrain cash flows.

Two, JFL has an accumulated loss of Rs 62.3 crore as of September 2009, against average yearly profits of about Rs 6 crore, , precluding dividend payouts in initial years after listing.. Once losses are written off, the company would face increased taxes, squeezing net margins.

Three, going forward, inflationary pressures could lead to raw material cost increases. Margins, thus, could slip, else JFL may increase retail prices of its products, which could hurt sales.

Current assets, including cash, also do not cover dues to sundry creditors. Of the capital raised that accrues to JFL, almost 40 per cent goes towards issue expenses and general corporate purposes which may be varied and difficult to ascertain.

Dominos Pizza, while enjoying brand equity in the door-delivery segment, still faces tough competition from dine-in eateries, other national lower-priced fast-food chains such as McDonalds, KFC and so on, besides small, local eateries.

These factors, therefore, argue against paying premium valuations for this offer. It may thus be avoided, but price corrections post-listing bringing about more reasonable valuations may be used to enter what is an attractive business with no other listed competitor.

--Hindu business line

avoid it or prepare to take loss.I am not going for it.

NEGATIVE RATING BY BUSINESS LINE SAYS AVOID IT .

risk nahi lena cahuga es ipo mein cahye acha retun bhi kyun na de

The company will continue to face competition from organized as well as unorganized palyers and has to compete with national and international pizza chains, such as Pizza Hut, Papa John's, Smokin Joe's and Pizza Corner. Also the company has to compete on a broader scale with casual dining and other international, national, regional and local food service businesses.

The company is present in food industry, which uses agri commodities as raw material. Most ingredients used in pizza and side dishes, including cooking oil, flour, cheese, meat products and vegetables, are commodities and therefore subject to price fluctuations as a result of seasonality, weather, demand in local and international markets and other factors. This may affect the company's margin and bottom line.

The Company has accumulated loss of Rs. 62.31 crore on September 30, 2009, which has resulted in erosion of a substantial portion of net worth. Pre-issue book value as of Sep 2009 is just Rs 5.88.

capital markets-rating 45

Valuations & Advise: At the upper end of the price band of Rs 145, the issue
is available at PE of 38.4x and at the lower end of Rs 135, it is available at PE
of 35.8x (on fully diluted equity of Rs 63.6 crores). There are no comparable
listed companies in India for JFL in the same area of operations. Globally,
Domino’s UK, Domino’s USA and Papa Jones are some of the peers, they are
currently trading at PE of 21x, 12x and 13.8x respectively based on FY10
estimated earnings. The pricing of JFL may seem expensive when compared to
its global peers. However, the point to note here is that Domino’s UK,
Domino’s USA and Papa Jones are all present in highly developed markets
where pizza consumption is a way of living. In contrast, India provides
tremendous opportunity for growth in the organised food service industry and
Quick Service restaurants (pizza parlors in particular) due to various factors
such as rising income levels, burgeoning middle class and younger population.
Considering that JFL will be the first listed company in the Indian food service
industry and the vast untapped opportunity in the space, we recommend
investors to SUBSCRIBE to this issue with long term prospective-----(way 2 wealth)

what is the prem of this ipo

This seems like the case of niche business, with unlisted peer's and extra extra rich valuation.
Some public issues that came like this are pvr,reliance power,irb infra,gmr(for airports) etc.
if the market is in bullish phase,like it is now,it might cooly list at premium and further the whole issue is worth only 300 crores.
But in some time, the valuation will start following the standard usual PE multiple. so if you are risk taker, then we can go for this issue for listing gains.

DON'T APPLY FOR NTPC OR REC FPO.

ENY ONE SEND ME GREY MARKET PREMUM BYE SMS

Dear Rakesh,
From BSE & NSE final subscription figures I got the info.