Brokerages trim target prices on Jubilant Foodworks on disappointing margin guidance

Emkay Global cut its price target on Jubilant Foodworks stock to Rs 750 apiece, from Rs 800 earlier.

Brokerages remained upbeat on Jubilant Foodworks Ltd. shares as the quick-service restaurant player's first ever investor meet came to a close.

During the meeting, Jubilant Foodworks outlined Domino's India's 3,000+ store goal, four new commissaries by FY28E and Domino's Turkey's 1,000+ store aim, plus Coffy's third-place Turkey push. The firm also discussed its focused innovations (food platforms/ value) and strengthening of its differentiated front-/back-end infrastructure.

"The only disappointment has been the guidance of merely 200 bps PAT margin scale-up over the next three years. We like the push on chasing revenue growth and using scientific methods to drive expansion," said Nuvama Institutional Equities.

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The brokerage added, "Given the anticipated debt reduction at the consolidated level, this increase should have been more substantial. This implies new interventions aren't generating significant leverage. A higher scale-up on standalone margins, which is key to our SotP valuation, can make a difference." It maintained its 'buy' call, but tweaked its target to Rs 776 per share.

Even domestic brokerage Emkay Global trimmed its price target on the firm to Rs 750 per share, from Rs 800 earlier, while maintaining its 'add' rating. "The margin guidance leads to a 120-130 bps cut to our margin estimates and a  percent cut to our SOTP-based target price," the brokerage stated.

Bernstein maintained its outperform call, with a target price of Rs 850 per share. The brokerage was bullish on Jubilant Foodworks' store expansion plans, along with the strong focus on operations and technology.

Jubilant Foodworks targets accelerated expansion of ~1,000 Domino’s stores over FY25-28 (vs recent annual additions of 200-250 stores). Jubilant Foodworks is gaining strong traction in tier2/3 cities like Belagavi (Karnataka), Tinsukia (Assam), and Solapur (Maharashtra), and is hence gaining confidence on penetrating deeper in cities like Latur, where it is opening its 3rd store.

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