Crisil reaffirms A1-plus rating on Jubilant Foodworks

Mumbai (Maharashtra) [India], Aug 12 : Crisil Ratings has reaffirmed A1-plus rating on the Rs 100 crore commercial paper programme of Jubilant Foodworks Ltd (JFL).
It said the rating continues to reflect an established market position in the quick-service restaurant (QSR) segment, robust supply-chain network, supportive changes in the operating environment and a strong financial risk profile.
These rating strengths are partially offset by the concentration of profitability to Domino's Pizza and susceptibility of profitability to competitive intensity and cost pressures.
The company is a market leader in the pizza segment through its exclusive rights to operate Domino's Pizza brand outlets in India, Sri Lanka, Bangladesh and Nepal.
Revenue growth was muted in fiscal 2020 due to the COVID- 19 situation across the country which temporarily affected normal operations (including dine-in) of restaurants.
However, in FY 2021, JFL saw sales recovery reaching FY 2020 levels in Q3 2021 and registered healthy growth in Q4 2021 on quarter basis.
Further, the pandemic accelerated the adoption of app-based ordering and delivery which has created a favourable structural shift.
Crisil said JFL's financial risk profile is supported by a debt-free status, strong net worth and high financial flexibility. The company has been debt-free for the past three fiscals.
The net worth was Rs 1,497 crore as on March 31 and is expected to increase further backed by healthy accretion to reserves.