Jubilant Foodworks rose to a new record after posting stellar numbers for the quarter ended March 2015 prompting foreign as well as domestic brokerages to upgrade their recommendations.
JP Morgan, Credit Suisse, Emkay Global and IIFL upgraded the stock, while Morgan Stanley, CLSA, Societe General, Goldman Sachs and Jefferies maintained their positive view.
Most analysts believe that Jubilant is poised for an uptrend in same-store-sales growth (SSSG) with strong margin visibility accruing in FY17e and FY18e.
“SSSG is tracking well amid muted sentiment. The company expects high single to near double digit SSSG in 2-4 quarters. Strong margin tailwinds is in the offing with operating leverage kicking in when SSSG grows equal or higher than cost inflation. Dunkin will further fuel margins in FY17/18e when it breaks even (120 stores),” said Emkay Global in a note to investors.
Shares of the fast food chain gained as much as 11.36%, its biggest single day gain in more than one and half years.
The stock closed up 12% at R 1,747.90 on BSE after hitting an intra-day high of R1,774 (up 13%). In contrast, the Sensex gained 0.43% and the FMCG index rose 0.67%.
The company reported 6.6% growth in in same-store sales in the January-March quarter against 1.9% in Q3 FY15, which infact outpaced its rivals Yum! Restaurants, which runs Pizza Hut, and Westlife Development, which runs the master franchisee for fast food chain McDonald’s in south and west India.
For the quarter ended March, the company reported a net profit of R31.5 crore on sales of R542 crore. While top line grew by 25% year-on-year, profitability witnessed 26% increase as compared to last year same quarter. The board of the company also recommended its maiden dividend of R2.5 per share for the year ended March 31, 2015.
“We believe that our positive SSSG (same-store sales) is primarily due to the success of our new product launches and marketing promotions and its great execution and ground,” said Ajay Kaul, Jubilant CEO in an analyst call.