Moneycontrol
Feb 04, 2016 01:39 PM IST | Source: CNBC-TV18

Buy Jubilant Foodworks, says Rahul Arora

Rahul Arora, CEO at Nirmal Bang Institutional Equities recommends buying Jubilant Foodworks.

Rahul Arora, CEO at Nirmal Bang Institutional Equities told CNBC-TV18, "We initiated on Jubilant Foodworks at about Rs 1,250-1,300. It went all the way up to Rs 1,950. The stock has had a tough last few months, there is no question and I think the one thing that has hurt it most is the very high foreign institutional investor (FII) ownership and the selling that we have seen from the FIIs. At 47-48 percent holding from a 9,100 plus Nifty you have gone down to 7,300-7,400. It is bound to be a victim of FII selling."

"If you see consensus expectations and we have highlighted this in our initiating coverage report, they were 16 and 12 percent higher for FY'16 and FY'17 in our estimates. So, there has been a reset towards our estimates and that has also hurt us. We have not yet downgraded it but I can be very sure to tell that we will. I don’t think you will probably see a price of Rs 2,000 on the stock over the next 18 months but you still probably will get 30-40 percent from here," he said.

"The recovery is taking a little longer than we expected but I still think it is a fantastic franchise. I think if I have to choose between Just Dial and Jubilant Foodworks, there is a straight dart throw at Jubilant. I think the management quality, what they want to do with the business is much better. I would be a buyer in Jubilant at this price."

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