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Last Updated : Oct 23, 2019 10:03 AM IST | Source: Moneycontrol.com

Jubilant FoodWorks Q2 profit dips on one-time loss; brokerages raise target

HSBC has maintained its buy rating on the counter and raised its target price to Rs 1,700 per share from Rs 1,500 earlier

 
 
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Shares of Jubilant FoodWorks rose nearly five percent intraday on October 23 after company's Q2 FY20 net profit declined on the back of one-time loss.

The company reported a 2.8 percent year-on-year decline in September quarter consolidated profit at Rs 73.4 crore due to one-time loss of Rs 12.5 crore. Consolidated revenue grew 12.2 percent YoY to Rs 998 crore.

With respect to one-time loss, the management said the exceptional item represented provision created against investments made by Jubilant FoodWorks Employee Provident Fund Trust in the corporate bonds of DHFL, Reliance Capital and IL&FS, and was fully provided for on account of prevailing uncertainties.

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At the operating level, consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 59.9 percent YoY to Rs 234.1 crore and margin expanded 700 bps to 23.5 percent in Q2 FY20.

Same-store sales growth stood at 4.9 percent, which was in line with analyst estimates of 3-5 percent. The same stood at 20.5 percent in the same period last year.

HSBC | Rating: Buy | Target: raised to Rs 1,700 from Rs 1,500 per share

According to the research house, revenue growth stood at 12 percent led by store growth of 6.5 percent and same-store sales growth of 4.9 percent. The tax cut makes the company a key beneficiary as long as same-store sales growth remains respectable, it added.

Morgan Stanley | Rating: Overweight | Target: Raised to Rs 1,650 from Rs 1,525 per share

The management is confident about long-term prospects of the food service industry, said Morgan Stanley. The new stores alone will drive over seven percent revenue growth in FY20, while it lower the FY20 EPS estimate by 5.8 percent, it said.

CLSA | Rating: Buy | Target: Raised to Rs 1,850 from Rs 1,655 per share

According to CLSA, the 4.9 percent SSS growth appears reasonable given weak macro, while the structural story remained intact. Gross store additions at 40 were at a 15-quarter high. The research house feels that the stock may be volatile in the near-term, while any weakness is in opportunity to buy. It upgraded its FY20 EPS estimate by 3-5 percent.

At 09:42 hrs Jubilant FoodWorks was quoting at Rs 1,472, up Rs 42.10, or 2.94 percent on the BSE.

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First Published on Oct 23, 2019 10:03 am
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