Domino's Franchisee Player Ends Down By Upto 38.33% From 52-Week High: Should You Buy?

Jubilant Foodworks' stock price ended at a market price of Rs 435.85 on BSE today, it was down by 38.33% from its 52-week high. This large cap food franchisee giant earnings call meeting was held on February 1, 2023, it shared some insights on the company's performance. Based on earnings call Prabhudas Liladhar, leading brokerage has recommended investors to buy stock of Jubilant Foodwoorks. Here are the details of the analyst coverage.

Revenues in line of the estimates but contraction in gross margins

According to Prabhudas Liladhar coverage report, the revenue of Jubilant Foodworks has grown year on year with the growth in Like for like (LFL), gross margins contracted. "Revenues grew by 10.3% YoY to Rs13.2bn (PLe: Rs13.1bn). LFL growth at 0.3%. Gross margins contracted by 213bps YoY/77bps QoQ to 75.5% (PLe: 75.5%). EBITDA declined by 8.6% YoY to Rs2.9bn (PLe: Rs3.1bn); Margins contracted by 457bps YoY/226bps QoQ to 22% (PLe:23.4%). Adj PAT declined by 35.5% YoY to Rs0.9bn (PLe: Rs1.1 billion)."

Store count is steady and delivery sales ratio is good

The number of stores has grown for Dominos as new additional stores were opened. "Dominos store count stands at 1,760 in 3Q23. Added 59 new stores & entered into 16 new cities during the quarter. Dunking Donuts store count stands at 24 in 3Q23. New businesses - Hong's Kitchen / Ekdum! / Popeye's store count at 12/6/12 (-2/0/+4). OLO to Delivery sales ratio stands at 97.7% in 3Q23 vs 97.6% in 3Q22. Total app downloads at 113.8mn vs 79.5mn/104.4mn in 3Q22/2Q23; Added 34.3mn/9.4mn downloads YoY/QoQ. Cumulative enrollment for Domino's Cheesy Rewards at 10.6mn users in 3Q23 (7.2mn/2.1mn in 2Q23/1Q23). International SSG growth for Sri Lanka/Bangladesh stands at 24.9%/44.7% in 3Q23", was reported in the brokerage coverage.

Buy stock of Jubilant Foodworks with a price target of Rs 567

Prabhudas Liladhar cuts its estimates, but is positive because of the MD's strategy. "We cut our FY23 / FY24 / FY25 EPS estimates by 10.4 /11.3 /9.8% on the back of tepid demand, inability to take price hikes in highly inflationary environment and higher capex and depreciation. JUBI remains on course to open 250 Dominos stores in FY23 (193 in 9M23). Popeyes appears to be the next focus brand for Jubilant Foodworks  with unit economics appearing in place with 40-50 stores planned by FY24. Loyalty programme - Cheesy Rewards continues to see strong enrollment of 10.6mn users since launch in May'22 and has helped improve order frequency and reinforce customer stickiness. MD's strategy would revolve around consumer value proposition, leverage data & tech, operational excellence and build a foundation of people & culture. We remain constructive on Jubilant'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 holds key to further re-rating. We estimate 22.1% PAT CAGR over FY22-25 and maintain BUY with a DCF based target price of Rs 567."

The stock price per share closed at Rs 435.85, with an intraday fall of 4.54%. and over one-year the stock price has surged down by 31.79%. Its 52-week high is at Rs 706.75 per share and 52-week low is at Rs 425.

Disclaimer

The stock has been picked from the brokerage report of Prabhudas Liladhar, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.