Shares of Jubilant FoodWorks hit their 52-week lows of ₹451.60 on May 12, 2022. The stock rebounded smartly after that, rising almost 37% in the last four months. However, the stock is still 32% down from its 52-week high of ₹915.49 that it hit on October 13, 2021.
The stock is trading at a premium. Should you hold the stock or sell it? Let's take a look at what brokerages and analysts have to say about the company's fundamental and technical aspects:
Fundamental views
Brokerage firm: Motilal Oswal Financial Services
The brokerage firm has a buy call on the stock with a target price of ₹720.
Jubilant FoodWorks remains our top pick in the quick-service restaurants (QSR) space. The company is well placed to capture the enhanced post-Covid opportunity presented to QSRs in India, underpinned by its three strong moats of delivery, value, and technology, said Motilal Oswal.
It has historically had the best business model for QSRs in India, with its emphasis on delivery (at 70% of sales prior to the pandemic). With the additions of technology and ‘value’ moats, the business has only intensified further.
Motilal added that even as the dependence of FSI players on aggregators continues to increase, JUBI remains relatively insulated because of: (a) having its own last-mile delivery fleet and (b) the majority of its orders originating from its own app.
The company also enjoys the best balance sheet, with a return on capital employed (RoCE) of over 20% for many years now (barring a blip in FY21 due to the pandemic). The balance sheet strength helps fund its profitable store expansions as well, which is supported by its triumvirate moats of delivery, value, and technology, the brokerage firm highlighted.
Motilal expects the company earnings per share (EPS) to post a CAGR of 23.5% over FY22-24.
"Since its new brands, including PLK, are still at nascent stages of development, our forecasts do not factor in any meaningful contribution from any of these businesses," said the brokerage firm.
Brokerage firm: Ashika Stock Broking
Jubilant FoodWorks plans to almost double the Dominos store count to more than 3,000 in the medium term. For Popeyes stores, it targets to open 250-300 new stores in the medium term, with a national presence.
The company has entered into an exclusive master franchise and development agreement with PLK APAC Pte. Ltd., to develop and operate the Popeyes brand restaurants in India, Bangladesh, Nepal and Bhutan. Popeyes offers JFL a new growth driver with a relatively young brand and a large addressable market.
Besides, the Indian QSR space, given the huge opportunity, is at an inflection point and Jubilant is expected to see accelerated growth as customers are looking for trusted brands, and shift from unorganized to organized, omni -channel experience.
"We recommend our investors to buy the scrip with a target of ₹710 from 12 months investment perspective. At the current market price, the scrip is valued at a P/E multiple of 55.9 times on Bloomberg consensus earnings per share (EPS) of ₹11," the brokerage firm said.
Technical views
Analyst: Jigar S. Patel, Sr. Manager - Equity Research, Anand Rathi
On the daily chart, Jubilant FoodWorks has been making higher highs and higher lows over the last couple of months. Also, volume is picking up on a daily basis which is complementing its up move.
From the indicator perspective, daily RSI (relative strength index) has taken support from ₹50 levels and bounced back nicely, further confirming the counter's upside.
One can buy in a small tranche at the current levels and buy another tranche at around ₹590 levels. The upside is expected till ₹720 and support is seen around ₹570.
Analyst: Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One
Jubilant FoodWorks is in a secular uptrend post making a swing low at ₹450-odd zone in May’22. The cycle of higher highs-higher bottoms is evident on the technical chart, implying a constructive set-up for the counter.
The stock has recently seen an ascending triangle pattern breakout that eventually got re-tested but resumed its up trend.
Meanwhile, the counter has breached the 200-day simple moving average (SMA) for the first time in the calendar year, adding up a bullish quotient to look forward to in the coming period. Even the significant oscillators align with the ongoing trend suggesting a strong upside potential in the counter in the near future.
According to a MintGenie poll, an average of 30 analysts have a ‘buy’ call on the stock.
Disclaimer: The views and recommendations given in this article are those of individual analysts and broking firms. These do not represent the views of MintGenie.
