Shares of Jubilant Foodworks Ltd has underperformed the Nifty 50 in 2022, so far. The company that operates brands like Domino's Pizza, Dunkin' Donuts and Hong's Kitchen slumped more than 20%, whereas the Nifty 50 has rose more than 5%, according to Rajesh Bhosale, equity technical and derivative analyst, Angel One.
Since, October 18, 2021 the stock has fallen nearly 37%. Also, the stock has fallen 31.55% from 52-week high of 806.4.The stock price has underperformed its sector by 47.16% in the past year.
“Ongoing under-performance of Jubilant Foodworks is expected to continue as they are going through the corrective phase,” said Amit Trivedi, market analyst, assistant vice president - technical and derivatives research at Yes Securities.
On the fundamental aspect, analysts believe that the volume growth of the company has been flat on a three-year compound annual growth rate, and even though there was some recovery post covid-19, the growth rates are not too encouraging. At the same time, the growth that is coming is mostly through store expansion.
Further, few analysts consider former CEO Pratik Pota’s exit as a negative event, and are skeptical about the new management’s capabilities when the company is going through a lot of initiatives and expanding overseas, and new brands like Popeyes.
However, few brokerage houses are bullish on the stock, and has maintained a ‘buy’ rating. Motilal Oswal Financial Services Ltd in its report said that the stock continues to remain their top pick in this space, as it has the best balance sheet to fund expansion, proven track record of managing both store expansion and healthy same-store growth, and technological edge over peers.
“The experience of the new CEO from Amazon India will further augment the company’s clear leadership on the technology front,” added the brokerage.
Similarly, Prabhudas Lilladher Pvt Ltd remains constructive on Jubilant Foodwork’s strength in pizza market, and its strategy to emerge as a multi-brand, multi-cuisine food tech company over the medium to long term.
“Success of Popeyes and other ventures is key to further re-rating,” the brokerage added.
Brokerage, Bonanza is confident about the steady earnings growth outlook to sustain, at the same time inflationary headwinds rise concerns on margins.
“Though the demand environment continues to be positive on the back of regionalisation and loyalty rewards program, largely driven by dine-in & takeaway growth and sustained delivery momentum, the inflation worries are here to stay,” said the brokerage.
On November 8, the company reported its July-September earnings, where its consolidated net profit rose over 9% on year to 131.52 crore rupees, and revenue from operations surged 16.6% on year to 1,301.48 crore rupees.
According to a MintGenie poll, an average of 31 analysts recommends ‘buy’ on the stock.
On Thursday, the stock closed at 552.65 rupees per share on the BSE, down 0.46%.