A Domino’s Pizza sign stands above the entrance to a Domino’s Pizza store (Photographer: Jason Alden/Bloomberg)

Goldman Downgrades Domino’s Pizza Operator On Expensive Valuations

Goldman Sachs downgraded Jubilant FoodWorks Ltd., which operates Domino’s Pizza and Dunkin’ Donuts outlets in India, citing high valuations even as the company reported a six-year high same-store sales growth in the March quarter.

The brokerage reduced its rating to ‘Neutral’ from ‘Buy’ while marginally increasing the target price to Rs 2,512, implying a downside of 2 percent from current levels. The stock closed 1.88 percent lower at Rs 2,560.3 yesterday, after hitting a high of Rs 2,668 post earnings.

Same-store sales of the Domino’s pizza chain grew 26.5 percent in the fourth quarter, which may be as good as it gets for the quick service restaurant operator, Goldman said.

We believe current valuation already factors in FY18-24 same-store sales growth equal to the fourth quarter exit SSSG.
Goldman Sachs Note

Goldman had added Jubilant to its ‘Buy’ list last month. The stock has gained 23 percent since then compared to a gain of 4.08 percent for the benchmark S&P BSE Sensex. Of the 31 brokerages covering the stock, 22 have a ‘Buy’ rating on it while seven have rated it as ‘Hold’, according to Bloomberg. Two brokerages have a ‘Sell’ recommendation.

Other Brokerages On Jubilant FoodWorks’ Q4 Performance


  • Fourth quarter Ebitda and Ebitda margin marginally beat expectations.
  • Strong earnings growth likely to drive stock going forward.
  • Strong SSSG, coupled with margin expansion, to drive over 40 percent compounded annual growth rate in earnings per share over FY18-20.
  • Maintain Buy. Raised target price to Rs 3,150, an upside of over 27 percent from current levels.

Credit Suisse

  • Again delivered a strong quarter in January-March with drivers in place for FY19.
  • Ebitda margin spiked on operating leverage, lower losses from Dunkin Donuts and cost cuts.
  • Expect double-digit SSSG and margin expansion in FY19.
  • Maintain ‘Outperform’. Raised target price to Rs 3,050, an upside of over 19 percent from the current levels.


  • Q4FY18 revenue, Ebitda and profit after tax beat estimates.
  • SSSG spurts, cost efficiencies boost Ebitda margin.
  • Expect 12 percent (YoY) SSSG and 354 basis point Ebitda margin expansion in FY19.
  • Maintain ‘Hold’. Raised target price to Rs 2,766, an upside of over 8 percent from the current levels.