Shares of Jubilant FoodWorks fell almost 8% in intraday trade on BSE on November 9, a day after the company announced its September quarter scorecard. The stock closed 7.55% lower at ₹566.45 on BSE.
On November 8, the food service company reported a nearly 17% year-on-year (YoY) rise in its standalone revenue from operations for Q2FY23 at ₹1,286.77 crore against ₹1,100.72 crore in the same quarter last year.
Profit for the quarter stood at ₹119.17 crore, down nearly 2% YoY against ₹121.53 crore in Q2FY22. EBITDA rose 9.2% but the EBITDA margin declined 170 bps YoY.
Even though the stock suffered losses after the release of its Q2FY23 numbers, most brokerage firms retained their views and kept faith in the stock.
Brokerage Motilal Oswal Financial Services maintained its buy call on the stock with a target price of ₹740, citing Jubilant's Q2FY23 results were mostly in line and 8.4% ‘like-for-like’ (LFL) growth was healthy, given the unfavourable base.
"Demand environment continues to be positive. Both the start of regionalization of the product mix and the strong response to the loyalty program are encouraging. While material cost pressures remain, there appear to be no material concerns on lease rentals and employee costs. We reiterate our buy rating on the stock, which continues to be among our top picks in the discretionary space," said Motilal Oswal.
"Jubilant Food remains our top pick in this space, given that (a) it has the best Balance Sheet to fund expansion; (b) its proven track record of managing store expansion and healthy SSSG; and (c) its technological edge over peers. The experience of the new CEO from Amazon India will further augment Jubilant's clear leadership on the technology front," said Motilal Oswal.
Kotak Institutional Equities (Kotak Securities) has an 'add' call on the stock with a target price of ₹630.
"Jubilant’s transition into a multi-cuisine QSR platform is on track. We trim estimates to factor in the near-term inflationary pressure, roll over and revise SoTP-based fair value (target price) to ₹630," said Kotak.
Brokerage firm Nirmal Bang Institutional Equities maintained an 'accumulate' call on the stock with a target price of ₹635 but reduced the target price slightly to ₹635 from ₹645 earlier.
The brokerage firm said Jubilant FoodWorks’ Q2FY23 operating performance was in line with its estimate.
Nirmal Bang noted the company's growth in Q2FY23 was equitable across regions and accelerated on the back of the
festive season. A large part of the growth was driven by order and volume growth.
However, the brokerage firm highlighted that the downtrading, reduction in items per order and mix change towards dine-in meant that the full benefit of price increases taken till date has not got reflected in higher revenue growth.
"Jubilant Food is already seeing some signs of key commodity costs receding, but cheese prices are still highly inflationary. It is not looking at further price increases and will absorb incremental inflation (if any), along with continued optimization of costs in the near term. In our estimates, we are building aggressive growth from other brands starting FY24," said Nirmal Bang.
According to a MintGenie poll, an average of 31 analysts have a ‘buy’ call on the stock.
Disclaimer: The views and recommendations given in this article are those of broking firms. These do not represent the views of MintGenie.
