Shares of Dominos’ operator Jubilant FoodWorks tumble 3% after fourth-quarter profit slump 9%; should you buy or sell?


Shares of Jubilant FoodWorks, which operates Domino’s Pizza and Dunkin’ Donuts chains in India, fell 3% to 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. The company’s consolidated revenue from operations during the quarter under review was Rs 1,175.97 crore compared to Rs 1,037.86 crore a year ago. So far this year, Jubilant FoodWorks stock has fallen almost 25%. However, analysts remain optimistic and see up to 27% potential rebound in the future thanks to growth; expansion of stores, development of synergies with new brands such as Hong’s Kitchen, Ekdum! and Popeyes.

Stock Discussion: Should You Buy, Hold or Sell Jubilant FoodWorks Stock?

Capital Axis: Add
Target price: Rs 630; Up: 11%

Jubilant FoodWorks revenue and operating performance were broadly in line with estimates, as the impact of high RM inflation was offset by price increases, cost savings and lower revenues, according to Axis Capital analysts. discounts. Store expansion continues to be strong as it opened 72 new Domino’s stores on a net basis with store opening guidance for FY23 raised to 250. They believe the appointment of Sameer Khetarpal as as Managing Director and CEO removed a key surplus. “RM inflation and timid SSSG remain major short-term concerns. We have cut FY23E/24E EPS by 16/9% and target a multiple of 55x (62x earlier). Revise TP to Rs 630 (instead of of Rs 750). Hold ADD,” the brokerage said in its report.

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IIFL Titles: Buy
Target price: Rs 630; Up: 11%

Analysts at IIFL Securities have kept their estimates largely unchanged, as they believe the uptick in sales as new stores open quickly will be offset by inflation/increased investment. Jubilant FoodWorks plans to add an additional 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 an Ebitda similar to Domino’s in steady state, according to management. “With the appointment of Sameer Khetarpal as the new CEO and given the stores’ aggressive expansion plan, JUBI, with its class-leading ROIC, looks well positioned among its QSR peers,” they said. The brokerage held a “buy” call on the stock with a target price of Rs 630.

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ICICI titles: Buy
Target price: Rs 720; Up: 27%

Analysts at ICICI Securities said in the report that Jubilant FoodWorks reported a decent quarter, ticking just about most of the boxes. According to them, an LFL growth of 5.8% seems unattractive in the context of rising prices. Increased store expansion (added 207 Domino’s stores on a net basis in FY22); Popeye’s expansion are two of the most important potential positive triggers. “The enthusiasm around the new CEO (with a good tech background) is valid as JUBI looks to strengthen its positioning to further accelerate growth and potentially realize cross-format synergies,” the brokerage noted.

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“We like the focus on (1) growth (store expansion, strengthening, increased focus on digital infrastructure), (2) developing synergies with new brands (Hong’s Kitchen, Ekdum! and Popeyes) and (3) broadening organizational bandwidth; and investments in a strong fleet give it an edge over its peers,” he added.ICICI Securities maintained a buy call on the stock with a unchanged target price of Rs 720 per share.

(The stock recommendations in this story are from the respective research analysts and brokerage firms. The AU Times Online takes no responsibility for their investment advice. Investments in the capital markets are subject to rules and regulations. Please consult your investment advisor before investing.)


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