Jubilant Foodworks slips 2% on Morgan Stanley downgrade
Morgan Stanley on Monday downgraded Jubilant Foodworks to "equal weight" from "overweight," citing increasing competition from the likes of Pizza Hut and the stock outperformance in the last one year, sending its shares down 2 percent.
November 05, 2012 / 15:28 IST
Moneycontrol Bureau
Morgan Stanley on Monday downgraded Jubilant Foodworks to "equal weight" from "overweight," citing increasing competition from the likes of Pizza Hut and the stock outperformance in the last one year, sending its shares down 2 percent."Jubilant stock is up 70 percent year-to-date, outperforming the sensex by 50 percent, as the market has rewarded continued delivery of strong earnings
growth. That said, we see low probability of earnings surprise or near-term catalysts hereon, and, with the stock trading near our target price, we recommend locking in profits," the investment bank said.Jubilant Foodworks operates the Domino's Pizza delivery chain across India and this year also started rolling out Dunkin' Donuts outlets in the national capital region.Domino's has expanded rapidly and is a clear market leader in some markets like Delhi. However, it may not be the same case in some other markets like Bangalore, for instance, where consumers equally prefer rival Pizza Hut, which is also expanding rapidly, Morgan Stanley said.It said that given limited brand differentiation, Pizza Hut may still need to innovate to compete with Domino's. However, in the near term, given rising competition from Pizza Hut and other quick service restaurants, Jubilant could see some pressure on same-store sales growth and margins, it added.Jubilant Foodworks shares were down 2.3 percent at Rs 1,313.70 on NSE in late trading. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
