The recent quarters have seen a series of initiatives beyond ‘Domino’s’, including FMCG, Biryani, Hong’s Kitchen ramp-up and 10.8% stake in Barbeque Nation. JUBI has now picked up a 32.8% stake in DP Eurasia, which has presence in Turkey & Russia among others, at attractive valuation. While this raises concerns (volatility, bandwidth etc.), investment is small at Rs 250 crore and despite being the largest shareholder, there will not be line-by-line consolidation.
Beyond Domino’s: In the last decade, JUBI has focused mainly on Domino’s and there has been some effort to scale up Dunkin’ which met with limited success. In 2019, JUBI forayed into Chinese through own brand Hong’s Kitchen, which currently has 10 stores. During lockdown last year, JUBI also expanded into FMCG through a range of ready-to-cook and plans are underway to expand into ready to eat as well. In 2020, JUBI also forayed into Biryani under own brand, Ekdum!. The company also picked up 10.8% stake in Barbeque Nation for `0.9 billion although this is purely a financial investment, per management.
DPE deal: JUBI has now picked up 32.8% stake in DP Eurasia (DPE) for GBP24.8m from Turkish Private Equity Fund II LP. DPE is listed on London Stock Exchange and based on Bloomberg estimates, the deal valuations comes to about <8x EV/Ebitda and <1x EV/Sales, a significant discount to JUBI’s own valuations.
DPE is the exclusive master franchisee of the Domino’s Pizza brand in Turkey, Russia, Azerbaijan and Georgia. It has a network of 771 stores, the bulk of which are in Turkey (568) and Russia (190). Majority of DPE stores are sub-franchisee stores (550/771), while the rest 221 are company-operated.
JUBI’s stake makes it the largest shareholder in the company; despite this, the company would not be consolidating the target asset on a line-by- line basis. A comparison of JUBI FY20 vs DPE 2019. JUBI’s Domino’s stores are 74% higher than DPE total stores although JUBI stores are 5.5 times DPE own stores. JUBI’s revenues are nearly twice of DPE revenues – the former has seen revenue growth at 8% CAGR vs. 4% for the latter in Indian rupee terms over 2014-20.