Jubilant Foodworks Ends At Record High As Brokerages Raise Targets

Shares of Jubilant Foodworks Ltd., the operator of Domino's pizza and Dunkin' Donuts chains, rose to a record in early trades on Friday after analysts raised price targets on the stock following its second-quarter earnings.

Analysts cite structural changes to its business model for the revision in target, and see the company well positioned to step up store and cuisine expansion. The stock gained for the third straight day, ending at an all-time high of Rs 2,485.15, up 6.2%.

The company, which disclosed its earnings just ahead of market closing on Thursday, saw same-store sales contract 20% over a year earlier in the three months ended September, according to its exchange filing. But overall sales for Domino's recovered to 82.3% of the previous year, while delivery and takeaway channels grew 5.8% and 49.8% respectively.

Of the 33 analysts that track Jubilant Foodworks, 21 have a 'buy' rating, seven recommend a 'hold' while the rest suggest 'sell.' The stock crossed its 12-month Bloomberg consensus price target of Rs 2,346.5 in Friday's trading.

Here's What Analysts Have To Say...

Jefferies

• Hold rating maintained.
• Price target raised to Rs 2,750 from Rs 2,650. Potential upside of 17.6%
• Q2 surprise fuelled by benign input prices, lower discounts, delivery fees and cost control.
• Gross margin surprised positively for second straight quarter
• Upgrade FY21 EPS estimates by 20% and FY22-23 estimates by 2-4%.

Kotak Institutional Equities

• Add rating maintained.
• Price target raised to Rs 2,700 from Rs 2,500. Potential upside of 15.4%
• Well placed to step-up store/cuisine expansion
• On track to emerge stronger from the Covid-19 crisis.
• Has transformed into a leaner execution engine.
• Raise revenue and margin forecast and upgrade EPS estimates by 21-40% for FY22-23E.

IDBI Capital

• Upgrade to hold from sell.
• Price target raised to Rs 2,350 from Rs 1,486.
• Faster growth in takeaway channel drives revenue recovery.
• Cost efficiencies drove margin expansion.
• Raise FY21/22 EPS estimates by 20% and 7% respectively.

Emkay

• Buy rating maintained.
• Price target raised to Rs 2,500 from Rs 2,400. Potential upside of 6.9%
• Faster recovery than peers led by strong delivery capability.
• Margins likely to remain around 27% with structural cost savings.
• Expect revenue / Ebitda / EPS CAGR of 10%, 17% and 27%, respectively, over FY20-23E.
• Well placed to benefit from weak competition and gain share.
• Strong growth and margin expansion prospects keep us positive.

Prabhudas Lilladher

• Hold rating maintained.
• Price target raised to Rs 2,290 from Rs 2,255. Potential downside of 2.1%
• Will enjoy higher margins post Covid-19.
• Domino's has nearly returned to normalcy.
• Raise FY21/22/23 EPS estimates by 12.5%, 4% and 1.6% respectively.
• Recommend accumulating although returns could be back-ended.