Jubilant FoodWorks Q1 results impact: Brokerages bullish on stock despite tepid earnings – what should investors do?

Jubilant FoodWorks Q1 results: Despite reporting broadly muted Q1 results in fiscal 2022-23, several brokerages are quite bullish on shares of Jubilant FoodWorks, an operator of fast-food chains Domino's Pizza and Dunkin' Donuts. The stock on Friday slipped by 2 per cent to Rs 554 apiece after a brief upward movement on BSE. 

Jubilant FoodWorks through an exchange filing reported a 63 per cent jump in its consolidated net profit at Rs 112.58 crore in Q1FY23, as against Rs 69.06 crore in a year ago quarter. While its revenue from operations up by 40.51 per cent to Rs 1,255.09 crore versus Rs 893.18 crore year-on-year (YoY). 

The June quarter was a decent quarter against the soft expectation, both on top-line and margins, ICICI Securities said in its review note. It continues to remain constructive and downgrade a notch to ADD from BUY with a revised target price of Rs 640 from Rs 720 apiece (13% upside). 

ICICI Securities cut FY24E earnings estimates by around 12 percent, modelling revenue / EBITDA / PAT CAGR of 21 / 24 / 29 per cent over FY22-24E. It addresses two issues upfront – (1) Stagnant revenue per store with accelerated store expansion and (2) Sub-par execution in new brands. 

Emkay Research said that the company expects better SSG (Single-story growth) with the new loyalty program, faster delivery (20min) and innovations. However, it expects relatively slower SSG for Domino’s, led by peers’ aggression and split-store impact. 

Emkay Research cuts FY24/25E EPS by around 6 per cent, factoring in the Q1 miss and 50bps lower SSG and stated that faster Popeyes ramp-up remains a potential upside. It retained a Hold rating with a revised target price of Rs 595 per share (5% upside).  

Sequential growth in revenue/store was a tad weak in view of around 5 per cent price increase and Omicron impact in QFY22, Kotak Institutional Equities said, adding that it looks like pent-up demand in dine-in centric restaurants/QSRs is weighing on delivery centric formats such as Domino’s.  

The brokerage maintained ADD rating with a target price of Rs 615 per share (9% upside).