IPO Alert : Jubilant Foodworks comes up with its IPO

Domino’s Pizza Ring Any Bell

Jubilant Foodworks Ltd. (JFL) is the market leader in organised pizza home delivery segment in India.The company was renamed from Domino’s Pizza India to Jubilant Foodworks and runs the Domino’s operations in India.

JFL is entering capital markets with an initial public offering (IPO) of 22,670,447 equity shares of Rs. 10 each with a price band of Rs. 135- 145 per share, on January 18, 2010. The company is going to raise up to Rs. 3,290 mn through this issue. The offer comprises a fresh issue of 4,000,000 equity shares by the issuer and an offer for sale of 18,670,447 equity shares by the India Private Equity Fund (Mauritius)

The business that JFL operates in is a rather niche segment and there are no comparable listed companies in the Indian Stock Market.

• With a price band of Rs. 135-145 , the company projects an EBITDA for FY11 of 15.1x set against the 11.6x EBITDA of its international peer.
• An estimated strong growth trajectory of 29.5% for FY09-11 which looks promising.

In a high growth Asian market, there is ample scope for a player like Jubilant Food works to expand and boost its sales.The food and beverage industry is a evergreen industry which does not go through a lot of fluctuation.Moreover, the fast food category (Pizza et all) is a favourite with the high disposable income holders of today.

Jubiliant CEO, Ajay Kaul said that the capital raised would be used for expansion in the domestic market to replay debts amounting to Rs 35-crore. This also suggests that the debt payment would lead to a strengthening bottom line and the expansion would bring in a profitable top line growth going forward.

Indiabulls has estimated an average target price of Rs. 154, which offers an upside of 14% and 6% over the lower end and the higher end of the price band, respectively.

It has already received a commitment of Rs 44.37 crore from anchor investors.Kotak Mahindra Capital Company Limited is acting as the sole book running lead manager to the offer.

What are your thoughts on Jubilant Foodworks IPO? With a recent successful listing of Cox & Kings IPO and then Godrej Properties IPO, we might just be seeing a revival of the IPO market in India.

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