Fundamentals

JUBILANT FOODWORKS 

Ticker 533155
BUY: Rs 1425.30
Target: Rs 1585

Jubilant Foodworks, which is a part of Jubilant Bhartia Group, owns the master franchise for Domino’s Pizza in India, Sri Lanka, Bangladesh and Nepal and also the Dunkin’ Donuts in India. Due to aggressive store expansion and declining losses of Dunkin’ Donuts, the company performed exceptionally well in FY18. The revenue for the year grew by 17.1 per cent YoY. Its EBITDA grew by 81 per cent YoY due to lower employee and other expenses. The PAT soared by 206.7 per cent YoY to Rs 206.4 crore. The company is focusing to expand and open new 70-75 stores of Domino’s till FY20. Also, it plans to focus on smaller store formats for Dunkin in order to break even and improve the profitability from the brand. Considering the robust financial growth and expansion plans, we recommend it as a BUY. 

FIRSTSOURCE SOLUTIONS 

Ticker : 532809
BUY: Rs 72.85
Target: Rs 82

The company is a leading provider of customised Business Process Management (BPM) services. During Q4FY18, the BFSI and healthcare segments performed better than the rest. Going forward, these two segments are expected to drive the growth. In FY18, although the revenue remained flattish, the EBITDA grew from Rs 441 crore to Rs 458 crore and margin stood at 12.9 per cent. Due to lower interest costs and tax payments, PAT was up 26.9 per cent YoY to Rs 326.5 crore from Rs 279.2 crore. For the first time, the company has declared dividend of Rs 1.5 per share. Revenue growth is expected to be triggered on the back of strong pipeline of deals. The management expects improvement in margins in FY19 due to better operational efficiency and low interest costs. Considering the stable growth and positive outlook, we recommend it as a BUY