Jubilant Foodworks is poised for rerating led by new ventures and festive season growth momentum
With core business in Q2FY22 slightly higher than pre-covid levels, management narrative has shifted from recovery to growth via aggressive scale-up.
Shares of Domino’s Pizza and Dunkin’ Donuts operator Jubilant Foodworks slipped 3.5% to Rs 3,823 apiece a day after the company reported its September quarter earnings. The company reported a 58.11% jump in consolidated net profit at Rs 119.82 crore for the second quarter ended September 30, 2021, aided by higher sales. It had a profit of Rs 75.78 crore in the same period last fiscal.
Revenue from operations stood at Rs 1,116.19 crore as compared to Rs 816.33 crore in the corresponding period of the last fiscal. While its operating profit jumped 33% YoY to Rs 290 crore in the reported quarter. However, the operating margin shrank 67 basis points on-year to 26% due to higher input costs.
Delivering such operating performance in challenging environment brokerages are upbeat on the stock. Here is what they have to say about Q2 results and the company.
Phillip Capital | Rating: Buy | Price target: Rs 4,600
With core business in Q2FY22 slightly higher than pre-covid levels, management narrative has shifted from recovery to growth via aggressive scale-up of Domino outlets & faster roll-out of new brands. The company aims large part of store openings will be more focused on delivery platforms and accelerating its expansion plan on a Pan-India basis for Hong Kitchen from being NCR / Delhi based brand.
Antique | Rating: Hold | Price target: Rs 4,200
Expect recovery in Jubilant Foodworks growth momentum with the increase in occasion-based home consumption during ongoing sports events and the upcoming festive season. The company has increased store expansion aggression (added 55/75 stores during 2Q/1H) with a large part of store additions coming in T2/T3/T4 cities with a higher focus on delivery channels. Besides the brokerage firm remains optimistic about companies growth trajectory based on superior execution and expansion of the total addressable market, by foraying into other cuisines (Chinese, biryani and fried chicken).
Prabhudas Lilladher | Rating: Accumulate | Price target: Rs 4,111
Remain constructive on Jubilant given the medium-term potential of 3000 stores. Lower competition given covid led shakeout strong ecosystem with digital and own delivery network. Launch of Popeye’s providing future growth potential given the huge opportunity in the Chicken market and increased investment in Hongs Kitchen to take it beyond Delhi and NCR. As well as increasing growth opportunities for Domino’s Pizza in Eurasia, Sri Lanka and Bangladesh.
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