Lacklustre Q4 show drags Jubilant FoodWorks down over 2 per cent

Shares of Jubilant FoodWorks, the food service company that operates global brands such as Domino’s Pizza, Dunkin’ Donuts and Popeyes in India, fell more than 2.7 percent over the past two days (Thursday and Friday), due to a 70 percent drop in its consolidated net profit in the quarter. fourth of fiscal year 23. On Thursday, the stock closed at $474.8, down 1.33 percent from Wednesday’s close on BSE; On Friday, it closed at $468.60, down 1.4 percent from Thursday. Interestingly, the stock has risen by 8 percent in one month since April 19, while it has fallen by more than 11 percent over the six months since November 22, 2022.

However, some analysts still see value in this stock as management directed a 200-225 addition of Domino’s Pizza and 30-35 Popeyes in India during FY24. They believe “same store sales growth (SSSG) and subdued raw materials inflation” It could turn the company’s prospects upside down.

Brokerages such as HDFC Securities, Centrum Broking, Elara Securities, Sharekhan and Motilal Oswal Research are very bullish on their outlook for the stock, giving it a Buy rating despite a lower-than-expected Q4FY23 bid. A report from Motilal Oswal said: “After a sharp correction in share prices of about 25 per cent from their peak, valuations appear reasonable at around 28 times FY 25E EV/EBITDA for a business that has a higher return on equity than peers from QSR and vending companies. other retail. Research, which repeated “buy” on the stock. The stock reached a 52-week high of €652.20 on October 6, 2022.

Sharekhan expected the company’s differentiated brand strategy, strong additions to stores, improved customer experience on the delivery platform, continuous innovation, and customer-focused offerings to drive growth in the medium-long term. “The stock has corrected 26 percent from its high of 59 times / 41.5 times fiscal 2024 / fiscal 2025 earnings,” the company said in its report, with a “buy” recommendation.

Poor performance, a concern

However, not all analysts are optimistic. “In our view, higher core/high dairy inflation will continue to cause JUBI to underperform against its peers in FY24. The weak margin exit resulted in a 2-3 percent cut to our estimate for FY25/26 EPS,” said Imkay Global. In its report: “We maintain our Suspended rating due to uncertainty/poor near-term performance.”

Meanwhile, Prabhudas Lilladher downgraded its ratings from Buy to Accumulate and its FY24 / FY25 EPS ratings by 9.5% / 8.9%. This comes on the heels of “tepid demand with only seasonal current recovery; delayed margin recovery in the inflationary environment and intensifying competition; upfront losses at Popeyes; and maintained higher capex guidance of ₹700 crore including Mumbai Commissioner,” it said in its report.