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Analysts on Dalal Street are bullish on a pizza maker Jubilant FoodWorks after looking at the company’s aggressive growth strategy. Jubilant FoodWorks recently won the franchise rights for Popeyes fast-food chain, known for its iconic chicken sandwich, spicy chicken and chicken tenders.

Considering the development, global financial services firm HSBC upgraded the company to ‘Buy’ with a price target of Rs 3,300. Popeyes is a leading quick-service restaurant (QSR) Chicken brand with 3,400 stores globally. Industry watchers believe that QSR chicken is a high growth, under-penetrated category with low competitive intensity. There are hopes that Jubilant would now tap into the chicken market in India that is dominated by KFC at present.

KFC competes against Burger and Biryani (through rice bowls) in India. The company dominates the category with 460 stores and system sales of around Rs 1,400 crore (FY2020). Kotak Securities expects Jubilant FoodWorks to open 250 Popeyes stores in five years; if executed well, it can garner a valuation of about $1 billion in five years.

“We like Jubilant’s new-found aggression and portfolio approach and will keep an eye on investments in talent and technology to make a successful transition,” Kotak said. The brokerage sees the fair value of Jubilant FoodWorks at Rs 3,150.

Shares of Jubilant FoodWorks have already rallied more than 100% to Rs 2,952.75 during the past one year. HSBC added that the current valuation appears to build in long-term earnings growth expectations of around 18%, “We find (valuations) rich if centred on Domino’s as the main value driver. However, the growth strategy of launching scalable newer formats like Popeyes makes the valuation level tenable,” HSBC said.