MFs, FIIs GIVE THUMBS UP TO JUBILANT FOODWORKS’ CHINESE PLAY

Buy shares worth ~500 crore following launch of Hong’s Kitchen

Jubilant Foodworks’ foray into Chinese cuisine seems to have gone down well with institutional investors. On Thursday, domestic institutional investors and foreign institutional investors (FIIs) bought ~520 crore worth of shares of the company in block deals on the NSE. The heavy buying came on the back of the company announcing its entry into the Chinese cuisine segment with the launch of Hong’s Kitchen on Wednesday.

ICICI Prudential Mutual Fund (MF) and Kotak Mahindra MF were the biggest buyers. ICICI MF and Kotak Mahindra MF each bought more than ~100 crore worth of shares. Tata MF and Birla Sun Life MF bought shares worth ~79 crore and ~54 crore, respectively. Among domestic insurers, Kotak Mahindra Old Mutual Life Insurance bought shares worth ~45 crore, while Bajaj Allianz Life Insurance picked up shares worth ~10 crore. Citigroup Global Markets (investment of ~54 crore), Morgan Stanley (~34 crore), Integrated Core Strategies (~10 crore) and Atlas Master Fund (~21 crore) were among the foreign investors. The opportunity to make sizeable investments opened up as promoter entity Jubilant Consumer off-loaded 3.9 million shares in open market, which accounted for three per cent of outstanding shares. While there are concerns on earnings impact due to investments in new foray, analysts feel it opens up opportunity to enter a large category with a high-margin profile.

Analysts feel the company’s valuation of 45-times FY20 estimated earnings is reasonable as other FMCG majors trade at over 50-times.