Jubilant Foodworks acquires 10.76% stake in Barbeque Nation

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Jubilant Foodworks’ expansion into newer cuisines continues with a stake purchase in Barbeque Nation Hospitality (BNHL). Jubilant Foodworks Ltd. is the operator of Domino’s Pizza and Dunkin’ Donuts stores in India. The food service company has announced an investment of ₹92 crore in Barbeque-Nation Hospitality Ltd. (BNHL) for an equity stake of 10.76%.

“Towards this end, the company has entered into a Share subscription agreement to acquire equity shares and a restated shareholders’ agreement to regulate the rights and obligations of BNHL’s key shareholders,” JFL said in a regulatory filing.

“We’re happy to announce our investment in Barbeque Nation — a differentiated, casual dining restaurant brand of scale with strong unit economics,” Shyam S Bhartia and Hari S Bhartia, chairman and co-chairman of Jubilant Foodworks, were quoted as saying in an exchange filing. “We’re confident that the proposed investment will create value for our shareholders.”

Barbeque Nation owns and operates 138 restaurants in 73 cities in India and 7 abroad as on Nov. 30, 2019. Its revenue for the year ended March 2019 rose 25.8% year-on-year to Rs. 742.5 crore. It also operates an Italian restaurant chain under the brand name Toscano, according to the filing.

Jubilant Foodworks expanded its platter by entering into the biryani segment under the brand name — Ekdum! and opened three restaurants in Gurugram. Biryani is among the most ordered food items on digital platforms in recent years. About 44.3 lakh orders were placed on Zomato while 5.5 lakh orders were placed on Swiggy during the Covid-19 lockdowns.

The Jubilant stock, which rallied 18 per cent in the last three months and 60 per cent in the last six months, is currently trading 33 times its book value, or 71 times its FY22 estimated earnings. The stock has always been traded at rich valuations as the company has delivered a profit growth of 22 per cent CAGR over the last 5 years with a return on equity (ROE) three-year track record of 25.3 per cent.