NDTV Profit's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer NDTV Profit's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Motilal Oswal Report
Jubilant Foodworks Ltd. reported sales growth of 3% YoY to Rs 13.5 billion in Q3 FY24, impacted by like for like decline of 2.9%. Delivery business was up 6%, while dine-in contracted by 5%. Demand challenges in the industry continue to impact growth metrics.
Domino's added 40 new stores and entered 10 new cities in Q3. The store expansion spree for Domino's and other brands has continued. The company has a store network in 407 cities now.
With persistent pressure on LFL/avarage daily sales, the operating margin saw further deterioration. Despite gross margin expansion (120 basis points YoY to 76.7%), profit before tax margin further slid to 6% versus 7% QoQ and 9% YoY.
Profit before tax declined by 30% YoY. Weak operating margins were further impacted by higher deprecation (investment in backend). Profit before tax margin in FY22 was 13.5%.
As near-term demand is expected to be soft, we do not see the operating print improving anytime soon. The backend investments (commissaries in Bangalore, Mumbai) will further keep the profit before tax margin under pressure.
We believe the current valuation does not capture the full earnings pressure. Hence, we downgrade our rating from 'Buy' to 'Neutral'.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.