Domino's earnings missed our estimates by 5% and 7% on weaker same store sales growth (SSSG). The Domino's store expansion plan for FY16 remains on track, but plans for Dunkin Donuts were toned down (to 20-22 stores from 30). Management refrained from guiding on SSSG in FY17 in view of the uncertain economic environment.
Jubilant’s margins have come off along with SSSG over the last three years (5% net margin in FY16E). Macro indicators
suggest such a recovery is imminent (low inflation, high consumer confidence, job creation in new sectors like e-commerce), while
disbursements pertaining to the 7th pay commission salary hikes and OROP benefits should also aid consumption. In terms of valuation,
Jubilant is trading at the lower end of its historical trading bands
