Looking at the chart, JFW (CMP:1430) has immediate support of around 1403 & sustain below that, it could fall to 1386-1370-1359 zone. Consecutive closing below 1359, JFW may fall up to 1274-1170 area in the bear case scenerio.
On the upside, consecutive closing above 1444-1450 area, immediate target may be 1480-1500. Sustain above 1500, it may target 1550-1580-1641 zone in the short term. Only Consecutive closing above 1641, JFW may target 1700-1730 area in the mid term and in the long term (FY:16-17), it may scale 1900-2000 territory in the bullish market scenerio.
Bottom Line- Positional Cyclical Trading Levels:
| SL</>5 | FROM SLR | |||||||||
| JUBFOOD | CMP | 1431 | ||||||||
| T1 | T2 | T3 | T4 | T5 | T6 | T7 | SLR | |||
| Strong > | 1403-1420 | 1450 | 1480 | 1520 | 1550* | 1580 | 1641 | 1720 | <1385 | |
| Weak < | 1385 | 1359 | 1326 | 1294 | 1270* | 1238 | 1159 | 1100 | >1403 | |
Q4 result of JFW will be published on 14-th May and market will keenly watch actual earnings & trend of SSSG (Same Stores Sales Growth). Along with Dunkin Donuts (DD), JFW has now nearly 900 stores in India. Its quarterly target is around 150-200 stores addition to cover almost every major parts of pan India Cities & Towns. Around 30% of its sales are generating from online mode, which is a key cost effective mode of acquiring & servicing clients. Both JFW & DD are adding new products & innovation in its menu.
Last Q3 result was below street estimate & largely impacted by higher employee costs (salary hike) and rental costs. But 1.9% SSSG was above estimate & supported the scrip. But in reality, it was the result of low base effect and may not translate into actual uptick in consumer demand. Two years ago, its SSSG was around 7.7%.
No doubt, JFW is an expensive share going by any key valuation metrics. But, the reason for such optimism may be its aggressive store expansion plans & improved discretionary spending by favorable demographics in India, which are keys for sequentially higher most important SSSG number & EPS.
JFW is also in a position to add another franchise in the QSR (Quick Service Restaurant) space besides existing Domino's & Donuts. So far, though it has been able to keep some pricing power for its menu, growing intense competition in this QSR space from various other brands like KFC, Mc, Pizza Hut etc may keep the same in a narrow range amid cyclical customer rotations.
But, JFW is ahead of others primarily for its wide distribution networks & aggressive expansion of stores. It always enjoyed a "scarcity premium" in the market as competitors were lagged behind JFW's aggressive expansion of stores. But situation is fast changing and JFW has to improve its actual earnings (EPS) in the next few quarters to justify its huge P/E. But, being a zero debt company having considerable cash flow and excellent management over input cost controls amid declining trend of raw materials cost along with increasing trend of franchise mode of store expansions may justify its high valuation in the days ahead.
As par BG metrics of Techno-Funda model, current median value of JFW is around 1300 and projected valuation is around 1500-1700 (FY:16-17) in the current market conditions.
| SCRIP | EPS(TTM) | BV(Act) | P/E(AVG) | LONG TERM | SHORT TERM | MEDIAN VALUE | 200-DEMA | 10-DEMA |
| JUBLFOOD | 18.09 | 85.95 | 65.53 | 1289.76 | 1311.07 | 1300.42 | 1403.27 | 1450.02 |
| JUBLFOOD | 24.25 | 123.75 | 65.63 | 1494.44 | 1519.13 | 1506.78 | 1403.27 | 1450.02 |
| JUBLFOOD | 31.9 | 179.45 | 65.63 | 1714.03 | 1742.34 | 1728.18 | 1403.27 | 1450.02 |
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