Jubilant FoodWorks shares hit all-time high; brokerages bullish after record Q3 results

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Published: January 23, 2018 4:53:48 PM

Shares of Jubilant FoodWorks rallied for the second consecutive day, and rallied to all-time high levels of Rs 2,330, after the company reported record Q3 results. Jubilant FoodWorks, exclusive India franchisee of Domino’s pizza, reported over three-fold rise in net profit at Rs 66 crore.

Jubilant stocks, HSBC, FoodworksGlobal brokerage firm CLSA has upgraded EPS by 21-28 percent, while maintaining buy call on the shares of Jubilant FoodWorks with increased target price at Rs 2,800. (Image: Reuters)

Shares of Jubilant FoodWorks rallied for the second consecutive day, and rallied to all-time high levels of Rs 2,330, after the company reported record Q3 results. Jubilant FoodWorks, exclusive India franchisee of Domino’s pizza, reported over three-fold rise in net profit at Rs 66 crore for the quarter ended December 31, 2017 against Rs 19.7 crore in the corresponding quarter last year,  a more than three fold rise in net profit.

Global brokerage firm CLSA has upgraded EPS by 21-28 percent, while maintaining buy call on the stock with increased target price at Rs 2,800. The shares closed at Rs 2,294 on NSE this afternoon. The target price implies an upside of more than 20% from the current market prices. Taking stock of the results, CLSA said that multi-quarter high same-store-sales growth & margins-EPS upgrade cycle continued. Further, CLSA says that same-store-sales growth at 17.8 percent was a huge positive.

The growth in revenue was backed by a 17.8% increase in Domino’s Pizza same-store sales, a measure of sales at outlets that have been open for at least a year, the company said in a statement.

Another global firm Credit Suisse has also raised the target price on the shares to Rs 2,570. Credit Suisse has maintained its outperform rating on the stock, while  increasing the target price from Rs 2,140 as numbers were exceptionally strong on all fronts and expect it to sustain.

Credit Suisse observed that Jubilant FoodWorks has been seeing a fundamental turnaround in Q3, with strong SSSG driven by orders even adjusted for GST. EBITDA margins spiked but cost and productivity initiatives have more headroom, Credit Suisse feels.

“Our emphasis on driving the key strategic pillars is translating into healthy same-store sales growth year-on-year, while setting the base for consistent growth in line with the potential of the QSR (quick service restaurants) space. The lowering in rate of applicable GST (Goods and Services Tax) to 5% has allowed us to demonstrate our commitment to deliver the best value proposition as we passed on the benefits of lower tax rate to the customers. We believe this to be a positive change, one that will impact the restaurant industry favourably,” Shyam S. Bhartia, chairman, and Hari S. Bhartia, co-chairman, Jubilant FoodWorks, said in a joint statement.

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