Jubilant FoodWorks Ltd. received target price cuts from Jefferies and Citi after the company's March-quarter earnings missed the Street's expectations. However, analysts highlighted the management's initiatives in driving volume growth and market share.
The overall consumer sentiment about the company, which operates fast-food chains Domino's and Dunkin' Donuts, continues to remain weak. But, their initiatives, such as delivery-fee waiver and expanding industry size, should aid in driving positive like-for-like sales and Ebitda-margin improvement, Citi Research said in a note.
Aided by exceptional item gains, Jubilant reported a sevenfold increase in its consolidated net profit to Rs 208.2 crore in the fourth quarter ended March 2024.
In the weak demand environment, the management's focus is on driving volumetric growth and market share gains by acquiring new customers, Morgan Stanley said. "The current operating deleverage cycle has resulted in significant cuts to estimates."
The focus is on volume growth led by offering value and new customer acquisition, Jefferies said in a note. "While macro remains uncertain, LFL growth picked up from February and the trend continues in April too."
The overall consumer sentiment about the company, which operates fast-food chains Domino's and Dunkin' Donuts, continues to remain weak. But, their initiatives, such as delivery-fee waiver and expanding industry size, should aid in driving positive like-for-like sales and Ebitda-margin improvement, Citi Research said in a note.
Aided by exceptional item gains, Jubilant reported a sevenfold increase in its consolidated net profit to Rs 208.2 crore in the fourth quarter ended March 2024.
In the weak demand environment, the management's focus is on driving volumetric growth and market share gains by acquiring new customers, Morgan Stanley said. "The current operating deleverage cycle has resulted in significant cuts to estimates."
The focus is on volume growth led by offering value and new customer acquisition, Jefferies said in a note. "While macro remains uncertain, LFL growth picked up from February and the trend continues in April too."
Jefferies On Jubilant FoodWorks
The brokerage maintained 'hold' and cut the target price to Rs 475 per share from Rs 500 apiece earlier.
Jubilant recorded low margins but delivery growth picks up.
The company saw some stabilisation in like-for-like sales growth in Q4.
Delivery trends improved, however, dine-in was severely under pressure.
Focus on volumetric growth by offering value and new customer acquisition.
FY25 to see 180 new Domino's stores, 50 Popeyes stores and 25 Hong's Kitchen stores.
A pick-up in same-store sales growth holds the key to price performance.
Citi On Jubilant FoodWorks
Citi maintained 'buy' and cut the target price to Rs 565 per share from the Rs 590 apiece earlier, implying a potential upside of 14% from the previous close.
Worst may be behind, while LFL and margin outlook strong.
Positive LFL for delivery bundled with recent initiatives to restrict dine-in sales.
Volume/order growth and market-share gains to aid concerns around competitive intensity.
Guidance of 50 new stores for Popeyes in FY25 should drive confidence among investors on scalability.
Citi cut FY25–26 revenue estimates by 3–4% and Ebitda estimates by 8–9%.
Earnings cuts may drive near-term stock price weakness; the brokerage sees scope for re-rating.
It sees any stock price correction as an opportunity to buy.
Morgan Stanley On Jubilant FoodWorks
The brokerage maintained its 'equal weight' rating with a target price of Rs 427 per share, implying a potential downside of 11% from the previous close.
The current operating deleverage cycle has resulted in significant cuts to estimates.
Improved underlying demand remains key to a recovery.
LFL turned positive on a weak base.
Delivery ticket size decline was partially offset by the introduction of packaging charges.
Jubilant's stock rose as much as 4.74% during the day to Rs 502.4 apiece on the NSE. It was trading 1.03% lower at Rs 474.7 apiece, compared to a 0.48% advance in the benchmark Nifty 50 as of 11:17 a.m.
It has risen 0.15% in the last 12 months but declined 15% on a year-to-date basis. The total traded volume so far in the day stood at 8 times its 30-day average. The relative strength index was at 57.
Fifteen out of the 33 analysts tracking the company have a 'buy' rating on the stock, 10 recommend 'hold' and eight suggest 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 1.3%.
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