Jubilant Foodworks plunges for 2nd consecutive day, down 8%

Jubilant Foodworks that runs Domino's Pizza chain in India crashed as much as 8 percent intraday on Tuesday as the brokerage firm Religare maintained a sell rating on the stock with a target price of Rs 1,080 after lower than expected third quarter numbers yesterday.

"Margins dipped 150 basis points year on year due to the impact of Dunkin Donuts' integration, an increase in service tax and high rental costs. We maintained a sell on the stock on a likely drop in same store sales growth and expensive valuations," Religare reasoned.

Net profit grew by 30 percent year-on-year to Rs 37.7 crore in October-December quarter, which was slightly lower than analysts' expectations of Rs 40 crore.

Growth in same store sales too was quite disappointing that came in at 16.1 percent as against analysts' expectations of 18 percent.

Ravi Gupta, CFO, Jubilant Foodworks highlights that for the FY13 same-store sales grew 17 percent and estimates that for FY14 the growth may fall below 14-15 percent.

Noida-based company has substantially increased marketing expenses which eroded margins during the quarter. Gupta sets margin guidance at 17-18 percent for FY13 and adds that in FY13 110 new stores would be opened indicating that there was no slowdown in terms of expansion.

At 11:45 hours IST, shares dropped 6.33 percent to Rs 1,062.40 amid hefty volumes on Bombay Stock Exchange.

In the previous trading session too, the stock fell 5.23 percent to close at Rs 1,134.15 after results announcement.