After global research firms such as Deutsche Bank and CLSA cheered for Jubilant FoodWorks, exclusive India franchisee of Domino’s Pizza, Macquarie too has joined the bandwagon with a buy call on the stock. Macquarie is bullish on the scrip with a target price of Rs 1,465. The shares were trading at Rs 1,416, up by more than 0.6% since the previous close.
Macquarie foresees a rise in same store sales due to the launch of the new campaign with the catchy phrase: ‘The official food of everything.’ Further, Macquarie says that the franchisee will see a strong demand in Maharashtra, with the implementation of Model and Establishment Act, a regulation which seeks to permit eating joints, movie theatres, malls, and local markets to remain open round the clock.
Jubilant FoodWorks, exclusive India franchisee of Domino’s Pizza had a few hiccups last month, after Deutsche Bank raised concerns about news reports bugs being found in Domino’s Pizza seasoning packet, which lead to a near 7% in share price in a single day. The global bank had compared the incident to ‘pesticides in Cola’ faced by Coca-Cola and Pepsi in 2004. Further, Deutsche Bank told CNBC TV18, “Worms in pizza, reminds us of ‘worms in chocolate’ faced by Cadbury in 2003 and ‘lead in noodles’ faced by Maggi.” Soon, Deutsche Bank reiterated its preference for the shares as a top pick in the consumer discretionary space, after the management of Jubilant FoodWorks said that their produce is ‘safe’ for consumption. Deutsche Bank has maintained a buy call on the stock with a target price of Rs 1,450.
CLSA has revised it’s target on the stock to Rs 1,900 from its earlier target of Rs 1,600. The brokerage house raised its same-store sales growth and FY19-20 EPS forecasts for the company by 6-12 per cent, while it raised the target PE multiple for the stock to 60 times from 55 times saying it is convinced that the company’s measures will yield results. Jubilant FoodWorks shares have returned more than 65% since January, as compared to BSE Midcap returns of 30% in the same period.