Moneycontrol Bureau
Jubilant Foodworks shares surged 10 percent intraday Friday riding high on its March quarter results which beat street estimates. Its same-store-sales (SSS) growth at 6.6 percent was quite impressive and most analysts expect it to jump going ahead. Analysts are betting on the stock with revised target.
JP Morgan has upgraded the stock to overweight with a target price of Rs 1800 per share. It has also raised FY16-17 earnings per share (EPS) estimates by 8-13 percent. "Upgrade is led by expectations of faster SSSG recovery aided by various strategic initiatives to drive market share gains, sustained store expansion strategy, healthy margin expansion led by operating leverage and moderate cost inflation and moderating losses for Dunkin Donuts," it says in a report.
Bank of Amrica Merill Lynch has also reiterated buy rating with a target price of Rs 1810, stating that there is possible upside risk to valuation of 10 percent from Dunkin’ over the next two years as it approaches breakeven.
It expects the company's recovery to standout versus peers due to its solid execution, wider presence and menu innovations. A cyclical resurgence in the quick service restaurants (QSR) industry due to a pick-up in discretionary demand can sustain growth in the long term, it adds.
"It has long-term positives sustained store additions, menu innovations. Jubilant is in a sweet spot with its highest reach, proven supply chain, strong balance sheet and growth via internal accruals. Risks include sluggish demand recovery, and inflation," BoML says.
CLSA continues to see Jubilant as a key beneficiary of recovery in urban consumption and retains buy rating with a revised target of Rs 2000 per share. "After a long time, food inflation was moderate, which along with lower energy costs helped margins.The management remains cautiously optimistic due to market conditions, yet, hopes for a high single digit SSSG in coming quarters," it explains.
The company posted net profit of Rs 31.5 crore in the January-March quarter, up 26 percent from Rs 25 crore in the corresponding quarter last fiscal. Income, during the period, also grew 25 percent to Rs 542.1 crore versus Rs 433.7 crore
During the quarter, it added 38 new Domino's restaurants and 8 new Dunkin Donut restaurants. The company aims to open 30 Dunkin Donut restaurants.
At 09:47 hrs Jubilant Foodworks was at Rs 1,723.95, up Rs 154.35, or 9.83 percent on the BSE.
Posted by Nasrin Sultana
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