Shares of Jubilant Foodworks surged 3.5 percent, reaching a 52-week high of Rs 619 per share on August 12, following a robust earnings report for the April-June quarter (Q1FY25). Despite this impressive performance, brokerages remain cautious, citing lukewarm quick service restaurant (QSR) performance and high valuations.
Over the past three months, the stock of this Domino's franchise operator has soared more than 33 percent, easily outpacing the Nifty 50’s 11 percent rise in the same period.
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Kotak Institutional Equities analysts have assigned a 'reduce' rating to Jubilant Foodworks, with a target price of Rs 540 per share, implying a 12 percent downside from current levels. While like-for-like (LFL) trends for Domino's India are promising, boosted by waived delivery fees, the lack of a more robust recovery in QSR consumption is expected to dampen earnings in the near future, said analysts.
Similarly, Motilal Oswal analysts reiterated a 'neutral' stance on Jubilant Foodworks, setting a target price of Rs 550 per share. They anticipate a gradual recovery for the company, with operating metrics likely to lag for a few quarters before any meaningful improvements.
"We have not made significant changes to our EPS estimates for FY25 and FY26. We value the India business at 65x P/E and the international business at 40x P/E based on FY26E," they noted.
ALSO READ: Jubilant Foodworks Q1FY25: Net profit nearly doubles to Rs 56 crore, revenue rises 45%
On the other hand, Citi analysts issued a 'buy' call on Jubilant Foodworks, setting a target price of Rs 715 per share, suggesting an upside potential of 15 percent. They believe the company’s strong dine-in sales will drive significant LFL improvements moving forward.
Jubilant Foodworks reported nearly a two-fold year-on-year increase in net profit to Rs 56 crore in Q1FY25, with revenues climbing nearly 45 percent YoY to Rs 1,933 crore. EBITDA also grew by nearly 39 percent YoY to Rs 383 crore, though EBITDA margins shrank by 90 basis points YoY to 19.8 percent.
The company’s LFL sales metric at Domino's stores rose by 3 percent, compared to a 1.3 percent decline in the same period last year. In Q1, Domino’s added 34 new stores and expanded into 6 new cities. The management plans to continue this expansion, aiming to open 180 new Domino’s stores in FY25.
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