Shares of Jubilant FoodWorks, which operates Domino’s Pizza and Dunkin’ Donuts chains in India, fell 3% to hit an intraday low of Rs 547 on BSE after the company reported an 8.8% decline in its consolidated net profit at Rs 96 crore for the quarter ended March 2022, impacted by higher expenses. Company’s consolidated revenue from operations during the quarter under review stood at Rs 1,175.97 crore as against Rs 1,037.86 crore in the year-ago period. So far this year, Jubilant FoodWorks stock has tanked nearly 25%. However, analysts remain bullish and see up to 27% potential rally going forward on the back of growth; store expansion, developing synergies with new brands like Hong’s Kitchen, Ekdum! and Popeyes.
Stock talk: Should you buy, hold or sell Jubilant FoodWorks shares?
Axis Capital: Add
Target price: Rs 630; Upside: 11%
According to analysts at Axis Capital, Jubilant FoodWorks’ revenue and operational performance was largely in line with estimates, as impact of sharp RM inflation was offset through price hikes, cost efficiencies and lower discounting. Store expansion continues to be strong as it opened 72 new Domino’s stores on a net basis with FY23 store opening guidance raised to 250. They believe that appointment of Sameer Khetarpal as MD & CEO removed a key overhang. “RM inflation and tepid SSSG remain key near-term concerns. We cut FY23E/ 24E EPS by 16/ 9% and target multiple to 55x (62x earlier). Revise TP to Rs 630 (from Rs 750). Maintain ADD,” the brokerage said in its report.
IIFL Securities: Buy
Target price: Rs 630; Upside: 11%
Analysts at IIFL Securities kept their estimates largely unchanged as they believe that higher sales on rapid new-store openings will be offset by inflation/higher investment. Jubilant FoodWorks plans to add another 20-30 Popeyes outlets in FY23 and have a national presence in the medium term with 250-300 stores. Popeyes is also expected to have similar Ebitda as Domino’s in stable state, per the management. “With the appointment of Sameer Khetarpal as the new CEO and given the aggressive store expansion plan, JUBI with its best-in class ROIC looks well-placed among QSR peers,” they said. The brokerage maintained a ‘buy’ call on the stock with a target price of Rs 630.
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ICICI Securities: Buy
Target price: Rs 720; Upside: 27%
Analysts at ICICI Securities stated in the report that Jubilant FoodWorks reported a decent quarter, just about ticking most boxes. According to them, LFL growth of 5.8% looks unexciting in the context of price hike benefit. Store expansion thrust (addition of 207 Domino’s outlets on net basis in FY22); Popeye’s expansion are two of the most significant potential positive upside triggers. “Excitement around new CEO (with good tech background) is valid as JUBI looks to strengthen its positioning to further accelerate growth and eventually realise cross-synergies across formats,” the brokerage noted.
“We like the focus towards (1) growth (store expansion, fortressing, higher emphasis on digital infra), (2) developing synergies with new brands (Hong’s Kitchen, Ekdum! and Popeyes) and (3) expanded organisational bandwidth; and Investments on a strong fleet give it an edge over peers,” it added. ICICI Securities maintained a ‘ buy’ call on the stock with an unchanged target price of Rs 720 per share.
(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)
