Jubilant Foodworks Shares Hit Record High On Bullish Analyst Ratings After Q1

Shares of Jubilant Foodworks Ltd. jumped to a record high as analysts remained bullish on the company, citing newer brands, rapid store expansion, and recovery in sales, among others.

That’s despite a 35% sequential decline in net profit of the operator of Domino’s Pizza and Dunkin’ Donuts in India to Rs 69.51 crore in the quarter ended June, according to an exchange filing.

• Its revenue fell 14% over the preceding quarter to Rs 893.18 crore.

• Operating profit or Ebitda of the Noida-based company dropped 15% quarter-on-quarter to Rs 212.27 crore.

• Margin contracted to 23.77% from 24.14%.

Pratik Pota, chief executive officer and whole-time director at Jubilant Foodworks, said growth picked up after easing of lockdowns and the momentum in June was markedly higher with almost complete revenue recovery. The company, that opened 29 new stores during the quarter ended June, has targeted to open 150-175 stores in the ongoing fiscal.

Shares of Jubilant Foodworks gained as much as 12% to a record high of Rs 3,513 apiece in the afternoon trade on Thursday. The stock has risen more than 21% so far in 2021.

Of the 32 analysts tracking the company, 22 have a ‘buy’ and five each recommend a ‘hold’ and a ‘sell’, according to Bloomberg data. The average 12-month consensus price target indicates a downside of 4%.

Here is what brokerages have to say about Jubilant Foodworks' June-quarter earnings.

Dolat Analysis & Research

• Recommends ‘buy’ with a target price of Rs 3,412 apiece.

• Aggressive store expansion plans, rapid recovery from second wave impact to be key growth drivers.

• Introduction of delivery charges to mitigate loss of revenues well absorbed by consumers.

• Expects margin to sustain owing to calibrated pricing and introduction of new products.

Emkay Global

• Recommends ‘buy’ with a 12-month target price of Rs 3,400.

• 100% sales recovery in June 2021 with the easing of lockdown boded well for the company.

• Aggressive expansion plans and digital, technological focus to aid growth in the upcoming quarters.

• Efficient cost structure continued to support margins.

• Modest hike in product prices to offset the impact of raw material inflation remained a prudent strategy.

ICICI Securities

• Recommends ‘add’ with a target price of Rs 3,500.

• Intent and potential to leverage data analytics augured well for future prospects.

• Company capable of repositioning as a food-tech platform and not just a collection of few brands in silos.

• Performance of delivery and takeaways channels impressive despite the second wave of Covid infections.

• Superior tech capabilities, focus on store expansion, new brands offer potential positive upside triggers.

IDBI Capital

• Recommends ‘hold’ with a target price of Rs 3,123.

• Best-in-class execution and zero-contact branding led to better-than-expected results.

• Business recovery in takeaway channel adversely impacted due to second wave before staging a strong recovery in June 2021.

• Benefit from the hike in delivery charges likely to flow from Q2FY22.

Jefferies

• Recommends ‘buy’ with a target price of Rs 3,062.80.

• Positive surprise on the margin front in the June quarter.

• Growth driven by factors like category formalisation, share gain by trusted brands, digital shift and plans to open new stories in FY22.

• Progress continued on non-pizza portfolio.

• Tier 3 and 4 cities adapted well to the delivery model.

• Dine-in revenues are expected to add to the gains as the pandemic recedes.

Motilal Oswal

• Upgrades to ‘buy’ with a target price of Rs 3,630.

• Sales broadly in line with estimates.

• Quick service restaurant business in India at an inflection point.

• Investments to boost the supply chain and addition of new stores are key growth drivers.

• Significant focus on technology to enhance customer experience bodes well.

• Company well-positioned to utilise structural opportunities in the QSR space.

Nirmal Bang

• Maintains ‘accumulate’ with a target price of Rs 3,130.

• Delivery channel continued to drive sales recovery despite second wave.

• Higher store additions to aid growth in the upcoming quarters.

• Continuous improvement in revenue trajectory, technology investments, brand equity, strong balance sheet are key positive for the company.

• Diversification in cuisine/brand/format portfolio to serve as a pillar for maintaining dominant position in QSR space.

• Newer brands would gradually scale-up and contribute to overall operations.