Shares of Jubilant FoodWorks, which operates Domino’s Pizza and Dunkin’ Donuts chains in India, gyrated 4 per cent on BSE on Friday, after the company reported a 63 per cent increase in its consolidated net profit at Rs 112.58 crore in the April-June quarter. The stock gained 2 per cent in the opening deals, and then fell 4 per cent from day’s high to hit Rs 554.25 as day’s low. Analysts see the stock rising to Rs 720 apiece, a potential rally of 27% from last close.
Jubilant FoodWorks shares have gained 10 per cent in one month, while it has fallen 23 per cent so far this year. In the last one year, the stock price has lost 24 per cent value. The company had posted a consolidated net profit of Rs 69.06 crore in the same quarter of the previous fiscal. During the quarter, the company opened 58 new restaurants for Domino’s Pizza, adding 12 cities to its network. In addition, Jubilant FoodWorks opened 2 restaurants and closed 6 restaurants of its new QSR Brands – Hong’s Kitchen and Ekdum!, reducing the total count to 20 by the end of the quarter.
Motilal Oswal Financial Services
BUY | Target Price: Rs 720 | Upside: 27%
Analysts said that outlook on growth and margin for the QSR sector remains attractive, unlike the rest of the consumption space, where uncertainty prevails on either or both fronts. “Jubilant FoodWorks remains our top pick in this space, given it has the best balance sheet to fund expansion; its proven track record of managing both store expansion and healthy SSSG; and its technological edge over peers,” they said. The experience of the new CEO from Amazon India will further augment Jubilant FoodWorks’ clear leadership on the technology front.
Edelweiss
BUY| Target Price: Rs 708 | Upside: 25%
Analysts lower their FY23E EBITDA by 3%, factoring-in the miss. Muted LFL growth and limited optionality for new formats (ex-Popeye’s) limit the case for premium valuation, they said. “We cut our multiple to 32x EV/EBITDA and roll over to H1FY24E, delivering a TP of INR708 (64x FY24E PE, in-sync with 5Y-average),” Edelweiss said.
Prabhudas Lilladher
BUY | Target Price: Rs 700 | Upside: 23.7%
Analysts remain constructive on Jubilant FoodWorks’ strength in Pizza market but its strategy to emerge as a multi-brand, multi-cuisine food tech company is on crossroads with little visibility in near term. “We estimate 33.0% PAT CAGR over FY22-24 and maintain our BUY rating with a DCF based target price of Rs 700 (Rs 708 earlier). We believe returns might be back ended given impending management change and rising competition,” they said.
ADD | Target Price: Rs 640 | Upside: 13%
Analysts said there should be some excitement around the new CEO as Jubilant FoodWorks looks to strengthen its positioning to further accelerate growth and eventually realise cross synergies across formats. “We continue to remain constructive. Downgrade a notch to ADD from BUY with revised target price of Rs640 (from Rs720),” they said. ICICI Securities also cut its FY24E earnings estimates by ~12%, modelling revenue / EBITDA / PAT CAGR of 21 / 24 / 29 (%) over FY22-24E.
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