Stock to look out for in 2011- JUBILANT FOODWORKS

JUBILANT FOODWORKS

Jubilant is primarily a food-service company and currently operates Domino’s Pizza stores in India. The company was incorporated in 1995 and initiated its operations in 1996. Currently the company has the largest Quick Service Restaurant (QSR) network of over 340 stores spread across 81 cities. The company is the market leader in the organized pizza market with a 50% overall market share and 65% share in the home delivery segment in India. The company focuses on a home delivery and takeaway oriented business model Apart from the Indian market, Jubilant is also a master franchisee for the Domino’s pizza brand in Nepal, Bangladesh and Sri lanka

We believe that Jubilant with ~357 stores spread across 85 cities, and over 50% market share in the fast growing Quick Supply Restaurant (QSR) segment with a strong brand image, and a sustainable business model (negative working capital, strong free cash generation) scores high on the business success front. The company is expected to clock in revenue and profit CAGR of 38% and 60% respectively over FY2010-13E. Given the strong earnings visibility and superior earnings quality (positive free cash generation), the company would continue to enjoy scarcity premium and is expected to trade at higher valuation than the other listed consumption players.
Currently the company with ~ 357 stores spread across 85 cities in India is way ahead of its competitors (Pizza hut ~150 stores, Mc Donalds ~170 stores, and KFC ~50 stores). The company is shoring up its presence in the hinterland, with over 30% of its stores being established in tier II and III cities. In the last few months it has entered into various new tier III cities. The addition includes cities like Calicut, Madurai, Gangtok, Raipur, Jabalpur, Patna and Bhubaneswar. The overwhelming response received by its stores across the new cities and the increasing thrust of the management towards opening stores in these new destinations is a clear testimony to the pent up demand existing in India’s hinterland. The attractive demographic profile coupled with income and wealth effect would continue to drive the strong consumer wave in the Indian economy.
The company’s revenue and earnings have grown at a CAGR of 40% and 74.2% respectively over the last four years from FY2007-10. While for the last two quarters, the overall revenue and earnings have grown at a stellar 64% and 81% respectively, led by new strong marketing efforts and new product offerings. It has enjoyed operating margin in the range of 12-16% over FY2007 to FY2010, while strong operating leverage coming from employee and store rentals led to strong expansion in the margins in H1FY2011 to 18.3%. Jubilant’s Indian Operations rank among the top three within Domino’s global operations. Jubliant has developed a strong supply chain management system with four regional supply centers or commissaries (Nodia [Delhi], Mumbai, Bangalore, Kolkata) spread across the country. These centers primarily manufacture dough and act as a warehouse for other products. Thus the centralised purchase function helps in negotiating better deals from the vendors and enjoying the benefits of scale. The company has a negative working capital cycle.

Regards,
Ankit Rambhia

Markets Largely Caught in Range-Bound Activity

Hello Readers

The Nifty has shown a range bound momentum for past 3-4 trading session.

Source:- NSE India

The Nifty has caught between range of 6020 and 5980. To initiate fresh long or short postions we have wait to see the trend of the Nifty. As there not much of movemnt in the Nifty we expect the worts would be over there could be some short position bulit in market so you can see some pressure on Nifty around 5900 levels.

The Levels to be watched are :-
1. If Nifty has to move upside it has to cross decisively the level of 6020 and close above 6050 levels then we can conform an imediate uptrend that could take market to 6100-6200 levels.
2. If Nifty has to move down side main support is 5980 to 5880 if these range is breached then you can see a shrap fall of 200 points on Nifty.

As  the Nifty is showing sings of uncertainty the best thing to do on Nifty is to stay away form Nifty.

  

"Investor Focus On Business Performance; Speculator Focus On Price Performance"

Happy Investing

Thanks & Regrads

Dev Purohit

Hello Readers,
After a choppy NIFTY last week, it seems as if markets will remain range bound (5800-6200).
I don't expect much volatility in NIFTY till jan first week as even FII's will be buzy celebrating this Christmas season. Expect moderate capital inflow by FII's.


Stock to look out for on Monday :

HeroHonda

• Expect action in this counter on monday as the price at which the Hero will buy 26% stake from Honda is still not disclosed and so as valuations are a concern
• Even the royalty paid for using goodwill of Honda is expected to be reduced from Jan-11

Ispat

• Company is making severe losses past two quarters and is under Rs. 6300Cr debt
• Lenders are going for stake sale which is pleged by the promoters of the company
• Companies interested in buying stake are major stell companies like JSW Steel, TATA Steel, ArcelorMittal, Jindal Steel
• I personally feel that SAIL will take over the company in near future

Derivatives :
Sell Nifty 6300 call of December expiry


Regards,
Ankit Rambhia

Nifty in Downward Trend

Hello Readers

Today Nifty has broken the important support of 5850 and has seen a sharp fall to 5760 levels. These could see further down side till 5600 as there no support for the Nifty till 5600 levels it could seen the free fall.It took support at 5750 and shown some bounce back on intra day chart.



Nifty has closed below 200 Moving Average that indicates more weakness in the market.
Short term trend show the weakness in charts.Bollinger Band has also open down side which further gives the confirmation for weakness.

My view on Nifty will to be short on Nifty for 5600 levels and cover the short by taking a call of 5800 where by that will protect form short covering.

Short position are build in open market so you can see some bounce back for short to be covered.

Stocks which look good in these market are :-
1. Pipavav Shipyard Ltd.
2. Jubilant Foodworks Ltd.
3. DLF Ltd.

If the strategy which recommended by me on 1st Dec 2010 when Nifty was at 6000 currently 5760 . Nifty has seen 240 points form the last recommendation on Nifty.

Thanks & Regards

Dev Purohit

Short Covering Leads the Market!! Nifty 100pts up!!

Hello Readers !

Market moves up due to short covering in market lead by major indies.
Nifty strategy in current market would be bullish as we have seen smart recovery in Nifty closing above 100 points . Close all the short position.
Nifty will seems bullish if it closes above 6020 levels fresh long could be initiated in the Nifty. You can make the Long Straddle to maximize the gains. Nifty has shows the short term uptrend . Nifty has to remain above the 5850 levels to continue the uptrend .Market could remain range bound 5800 to 6100.



Top Picks For 2nd Dec 2010

1. VIP Industries Ltd.
Buy at 640 SL @ 635 TGT 660

2. BEL
Positional Buy above 1730 SL 1680 TGT 1820

3. IndusInd Bank Ltd
Buy at 300 levels SL 298 TGT 310/ 340

Thanks to Krishna Loya for sharing comments on market.

Previous Recommendations Result

1. J P Associates given @ 102 currently at @ 115

2. Suzlon Energy @ 44 currently @ 51

3. Cain India @ 290 currently @ 320

4. Pipava Shipyards @ 70 currently @ 77

More than 10 % returns in 2 days !

Thanks & Regrads

Dev Purohit

29th NOV 2010

Hello Readers !!

Today Nifty showed good recovery form the low level and up move sustained towards closing of the market.
In these market you can adopt strategy sell on rise and hedge nifty between 5700 to 5900 levels , As a Trader be Short on Nifty till close above 5900 level .
You can have Strategy such as sell nifty at current levels for tgt of 5800 -5750 levels and hedge it with call of 5900 NOV futures that will be best bet in the market.

For Investor i can say it is a discount sale which is available in Nifty so be Bullish on Market and Buy on Dips !!

Investment Ideas for Month :-
1. J P associates @ 104 for tgt of 140 as it has had betting with no fundamental changes so bullish on it.

2. Suzlon @ 44 levels for short term tgt of 52-55

3. Pipava Shipyards @ 70 for Tgt of 85

4. Cain India @ 292 for Tgt of 350

Many more to come !!!

Thanks & Regards

Dev Purohit

Selling Pressure

27 November 2010
When Nifty Broken Important Support Of 5930, that Time I Predict That Nifty Comes 5700-5720 And On 26 November 2010 Nifty Once Trade Below 5700 Level, Closing Below 5800 Is Still Indicate Negativity On Market, Once Nifty Cross & Close Above 5815 Levels Then Nifty Can Touch Upper Target Of 5930 In Coming Week, And Close Above 5930 Can Bring Bulls Back In Indian Market Once Again, Nifty Fall On Some Scams & Bribery Case & OfCourse On Korea War News.

Technically Close Below 5800-5820 For Two Consecutive Session In Nifty Then Nifty Can Slide Till 5450-5500 In Very NearTerm,
But Some Big Bulls & Punters Of Market Says Correction Is Near By Over & They Start Buying At 5700 Levels On Friday & Once They Successfully Bring Nifty At 5820 Level Also, As Per Bulls & Punters News They Again Says That Nifty 6200+ Level In Max. Couple Of Months.

Thanks & Regards

Dev Purohit

Market Looks Strong !!

The Nifty has shown the support around 5900 levels and give bounce back to 6300 levels.
I expect nifty to move further and make new all time high around 6400-6500 levels .
Strength will be provided by Oil and gas sector and Realty look much better at these valuation.
My pick for month will be
1. DLF for TGT of 390-400 as result will be out these week ,
we expect profit of 450 cr v/s 412 crs QoQ basis.

2. Reliance also look attractive at these Valuation discounting the revenue base and improvement in the cure price will make gross refinery margin attractive , near to year end curd can touch 100 $ level.
Gas discovery and other business make it best buy
RIL with TGT 1400 .

Regards
Dev Purohit