I still remember my days as the fund manager at DSP Merrill Lynch (now DSP BlackRock), when our team would regularly feast on pizzas, which soon became a periodic ritual. Such was the craze that we even looked into if there was a way to play the growing interest in pizza. Unfortunately, even though Domino’s was doing brisk business back then, it was an unlisted entity. But when I went solo in 2009 with AlfAccurate, I got lucky because the very next year, Jubilant FoodWorks (JFL), which is the master franchisee of the US-owned pizza brand in India, Nepal, Bangladesh and Sri Lanka, went public. The company, which had opened its first Domino’s Pizza store in India in January 1996 at New Delhi, saw a stunning debut, raising ₹330 crore and ending day one at ₹229 with 58% gains against its issue price of ₹145 and a market cap of ₹1,456 crore. In five years, its market cap has gone up nearly 7x to ₹9,700, with the firm clocking a CAGR of 34.52% till FY15, with 959 outlets currently. The superlative performance is not without reason.
Time to say cheese
India’s organised food service industry is estimated at $2 billion compared with the overall industry size of $94 billion; the former’s growth rate is 13% against the latter’s 10%. That speaks about the size of the opportunity organised food chains have in India over the next five years, which has us excited about Jubilant. We follow the Triple M approach before we invest in any company:
Size of the market: In case of Jubilant, the sheer size of the market is huge (by 2020, the industry is expected to touch $