Q4 results preview: Domino’s pizza maker may post weak results on raw material inflation, weak demand

Jubilant FoodWorks Limited, which operates brands such as Domino’s, Dunkin Donuts, and Popeye’s – is expected to report weak earnings for the quarter that ended March 2023 on Wednesday, May 17, 2023, as the profit is seen declining in double-digit and margins likely to be under pressure. 

According to Zee Business research, Jubilant FoodWorks is likely to report a net profit of Rs 62 crore for the three-month period, which translates to a decline of 35 per cent year-on-year (YoY) compared to the profit of Rs 96 registered in the corresponding quarter a year-ago period.  

The pizza maker’s revenue is estimated at Rs 1,248 crore for the final three months of the financial year gone by, up 6 per cent YoY as against Rs 1,176 crore for the year-ago period. 

The analysts peg food retail chain company’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) – a measure of the company's overall financial performance – at Rs 260 crore for the three-month period, marking a fall of 5 per cent from Rs 274 in the same quarter of FY22. 

They estimate the company’s margin – a key measure of a business's profitability – at 21 per cent in the March quarter of FY23 from 23 per cent YoY due to raw material inflation. 

Zee Business analysts believe the Like-for-like (LFL) growth is expected to fall by 1 per cent during the January-March quarter of the previous fiscal year on a weak demand environment. 

Jubilant FoodWorks is expected to open 57 Domino's outlets in the last quarter of FY23, the analysts at Zee Business noted and said management commentary on gross margins, store expansion, and outlook on Popeyes are key factors to monitor during Q4 earnings. 

In line with Zee Business estimates, domestic brokerage firm Elara Capital was also of the view that Jubilant FoodWorks may report muted numbers for the March quarter. 

“Demand environment remains weak in the QSR (Quick Service Restaurant) space, due to muted consumer sentiments and discretionary spend; hence, revenue is expected to decline sequentially on festival base,” the domestic brokerage house said in its preview on Jubilant FoodWorks.  

“Cost pressure persists in the dairy space, leading to an increase in prices of raw material, especially for Jubilant FoodWorks since cheese is a key raw material for the company and prices of other raw materials, such as vegetables and breads, remain stable,” the brokerage said in its preview. 

Ahead of Q4 earnings on Wednesday, shares of Domino’s maker were flat with a negative bias to Rs 467.45 per share minutes before the market close on Tuesday.