Crisil has reaffirmed A1-plus rating on the Rs 100 crore commercial paper programme of food services major Jubilant FoodWorks which operates Domino’s Pizza and Dunkin’ Donuts chain in India.
The rating continues to reflect an established market position in the quick-service restaurant (QSR) segment, healthy operating efficiency driven by a robust supply-chain network and a strong financial risk profile, said Crisil.
These rating strengths are partially offset by the weaker performance of the doughnuts division (Dunkin Donuts) and susceptibility of profitability to competitive intensity and cost pressures, it added.
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 is expected to be muted in fiscal 2021 due to COVID-19 situation across the country which has temporarily affected the normal operations (including dine-in) of the restaurants.
However, strong fundamentals for long term QSR segment growth and established market position of the company should see its operations normalising over the medium term.
Also, said Crisil, continued association with the Domino’s brand with a timely renewal of the agreement as and when due remains key.
Crisil said the company’s financial risk profile is supported by a debt-free status, strong net worth and high financial flexibility. The company has been debt-free since the past three fiscals.
The net worth was Rs 1,183 crore as on March 31 and is expected to increase further, backed by healthy accretion to reserves.