Jubilant FoodWorks stock slips after business updates via concall; what is the pain point?

Jubilant Foodworks share price NSE BSE: Jubilant Foodworks shares traded over 2 per cent lower in the afternoon trade on March 13, after the company gave an update on its Turkey (DP Eurasia) and Bangladesh businesses through a concall.

At 12:01 p.m., shares of Jubilant Foodworks traded 2.05 per cent, or Rs 9.15, lower at Rs 436.2 apiece. The market capitalisation of the company at around the same time stood at Rs 28,825.34 crore. 

Jubilant FoodWorks is one of the leading food service companies in India. It is a part of the Jubilant Bhartia Group. The company holds exclusive master franchise rights from Domino’s Pizza Inc. to develop and operate the Domino’s Pizza brand in India, Sri Lanka, Bangladesh, and Nepal. Jubilant FoodWorks also has exclusive rights to develop and operate Popeyes restaurants in India, Bangladesh, Nepal, Bhutan, and Dunkin’ restaurants in India.

Con call highlights 

The company stated that it has recently increased its stake in both businesses by close to 100 per cent. It acquired a 33 per cent stake in DP Eurasia in 2021, which has over the years increased to 94.3 per cent. Meanwhile, the company has raised its stake from 51 per cent to 100 per cent in the Bangladesh business.

As per its investor presentation, the company aims at:

>> Building an attractive portfolio of brands in promising, high-growth, and under-penetrated markets.

>>Leveraging the India playbook.

However, analysts look concerned given the currency devaluation in Turkey as well as the pressure on Indian business. 

For instance, analysts at Prabhudas Lilladher note that the Turkish business presents an attractive long-term prospect driven by geographical expansion (addition of 560 stores in the medium term), 51 per cent market share, strong brand recall, the expanding COFFY network, and a margin-accretive franchise model that reduces store operating costs.

Nonetheless, currency devaluation remains a significant concern due to the continuous downtrend of the Turkish currency (Lira has depreciated from Rs 28 in 2012 to current levels of Rs 2.5).

The brokerage further added that the company's Bangladesh business is still in the nascent phase, with only 26 stores. "Nevertheless, it is experiencing robust growth in existing stores and presents an opportunity to expand into more cities, making it a good option for expanding the footprint in international markets," wrote Amnish Aggarwal, a research analyst at the brokerage firm, in a report co-authored by Vishwa Solanki and Hasti Savla, also research analysts. 

India's business remains under pressure due to tepid demand in the Pizza category and an increase in competition. Popayes is shaping up well and is targeting Rs 10 billion in sales in the fastest time by any QSR, the brokerage added. 

It has retained a 'hold' on the stock with a target price of Rs 495 apiece. 

Motilal Oswal has also continued with a 'neutral stance on the stock with a target of Rs 480 apiece, as it believes the company's India business recovery will be more critical for the stock’s performance. 

What do global brokerages say?

JP Morgan has maintained a 'neutral' stance on Jubilant FoodWorks for a target of Rs 495 apiece. 

Further, Morgan Stanley has given an 'equal weight' with a target price of Rs 456 apiece. 

Macquarie continued with an 'underperform' rating and gave a target price of Rs 320 apiece. 

Jubilant FoodWorks share price: Past performance 

In a year, shares of Jubilant FoodWorks have lost 0.35 per cent against Nifty50's rise of 30 per cent.

Catch the latest stock market updates here. For all other news related to business, politics, tech and auto, visit Zeebiz.com.

DISCLAIMER: The views and investment tips expressed by investment experts on zeebiz.com are their own and not those of the website or its management. zeebiz.com advises users to check with certified experts before making any investment decisions.