If you ask me to tell the name of one company for long-term holding to get a 99% sure shot result for a multi-bagger return, then I will say it is Jubilant Food share, and from multi-bagger return means 10X or 15X return at least in 10 years and this is the minimum side you may get 20X or even 30X. Now, I will explain to you step by step why there is high potential in this stock. Just look at the below points, and you will understand.
Evergreen Business Model of Jubilant Food:-
Jubilant Food has an Evergreen business model due to consumption and junk food addiction. To understand this, take an example to assume there is a shoe manufacturing company. If anyone buys any boots, there is very little chance he will repurchase them before one year unless his shoes break. But if you had eaten the pizza last night, then there are more than normal chances that you will tonight due to addiction. We know very well that everyone loves eating delicious food. If anyone is addicted and has money in his pocket, no one can stop him from buying the pizza, similar to the Smoking addiction. As a result, ITC has a very high revenue share from its cigarette business, and it is only due to people being addicted to Cigarettes.
Increasing demand & sales due to increasing urban population:-
Almost every American eats pizza, and we are on the same track? Pizza lovers are growing daily due to new Domino stores opening yearly and shifting to the metro area. Due to market leader dominos is taking the big share of growth. As a result, Jubilant food share is performing very well.
High Margin => Huge Profit:-
Company Net profit mainly depends on two factors: one is sales, and the second is how much margin the company has. There are four cases:-
The company has low sales & low margin => deficient Net profit. The Company has high sales but low margin => Moderate profit. Still, high margin => Moderate profit. Company have high sales & high margin => very high profit
we all know that due to unique Pizza quality, Domino have the advantage over other competitors, which result in a very high margin for its pizza and due to brand name it also has very high sales so jubilant lies in the 4th category and has only approx 16000 crores market capitalization which will increase exponentially due to future high demand and its strong store network. Still, it is a growing phase, a perfect opportunity for us to buy jubilant food share right now.
Note:- if you like reading this report, then you can also check my other stock recommendations for other stocks like Lupin, Maruti Suzuki, RBL Bank, etc
Now, the problem with Jubilant Food:- The common problem with most of the good quality stock is they are expensive, and it is tough to find the good quality stock @ a reasonable price; the same is here with Jubilant Food share because right now it is @ 65 P/E (Price to earnings ratio) which is very very high, but due to very high growth potential it is still a buy call for him but only if you are thinking for the long term, but if you want to buy for just 2-3 months then it is not recommended because you may suffer losses in future.
The Conclusion:- Jubilant food is available at a fair price(1250/- per share) but not at a good price even after the recent market crash in Sept-2018 and Oct-2018, . The market may come down in the future, and you must wait to get the triumphant food share at 1000 rs per share, but you can buy at 1100 also if you are thinking for long-term investment.