Jubilant FoodWorks share price tanks 6% after Q3 results; brokerages say ‘buy’, stock may rally 30%

Domino’s operator Jubilant FoodWorks share price fell more than 6 per cent to Rs 3,097 apiece on Thursday, after the company reported a 7.5% on-year rise in net profit in the fiscal third quarter.

Domino’s operator Jubilant FoodWorks share price fell more than 6 per cent to Rs 3,097 apiece on Thursday, after the company reported a 7.5% on-year rise in net profit in the fiscal third quarter. Jubilant FoodWorks, which operates quick service restaurant (QSR) chains Domino’s Pizza and Dunkin’ Donuts, said yesterday its consolidated net profit rose to Rs 133.19 crore for the third quarter ended December 2021, against Rs 123.91 crore in the corresponding quarter last year. Analysts see up to 27 per cent potential upside in the stock with a target price at Rs 4,200 apiece.

Stock talk: Jubilant FoodWorks recommendations, price targets

Research firm Motilal Oswal Financial Services has recommended to buy Jubilant FoodWorks as it is far better placed than other QSRs (with more than half its sales coming from its own app – app sales continue to increase). Analysts have cut FY22/FY23/FY24 EPS forecasts by 8%/14%/15% due to the impact of further COVID restrictions in 4QFY22; and some likely pressure on SSSG/LFL over the next few quarters on account of the ongoing splitting of stores. “We remain bullish on Jubilant FoodWorks on the back of its best-of-breed metrics and established right-to-win,” they said. It has maintained its ‘buy’ rating with a target price of Rs 4,200 per share.

Analysts at ICICI Securities said that it was a weak quarter. They have given an ‘add’ rating to it with a revised price target at Rs 3,600 apiece, a 9 per cent rally from the previous close of Rs 3,301.25 apiece. “Jubilant FoodWorks saw a weak quarter with 3QFY22 revenue up 12.9 per cent year-on-year. Performance of delivery and takeaway channels has been impressive, mitigating the still sluggish dine-in,” it said. Analysts have cut FY23 earnings estimates by 11%, modelling revenue/EBITDA/PAT CAGR of 23/29/51(%) over FY21-24E.

Nirmal Bang has also pegged the same target price as that of ICICI Securities. It has revised down its target price from Rs 3,970 apiece. Analysts said that restrictions due to the third covid wave at the end of 3QFY22 (peak period for restaurant industry) had an impact on the recovery in the dine-in business, bringing down the overall growth rate for the quarter for Jubilant FoodWorks. Input costs increased sequentially and annually, despite that the company delivered EBITDA margin expansion on the back of productivity measures and pricing action taken in Dec’21, it said. “Going forward, at an industry level we do expect delivery business to moderate slightly with dine-in coming back, it will still remain at a significantly elevated level compared to the pre-covid period. “Jubilant does not expect to see any demand contraction going ahead even after the recent pricing action,” ICICI Securities said in a report.

(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)

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