Jubilant falls most since September 6 as Q2 margins disappoint

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MUMBAI: Shares of Jubilant FoodWorksBSE -7.45 % fell the most since September 6 on Wednesday as the company reported a 1.5% fall in standalone net profit for the September quarter at Rs 21.6 crore from the same period a year ago. The stock fell 7.4% to end at Rs 1,058.70 on the BSE.

Analysts said the consistently below-par margin performance was the biggest disappointing factor despite the company recording a positive same store sales growth (SSSG) of 4.2% against 3.2% in the second quarter of the previous financial year. In the June quarter, the company had posted a negative SSSG growth of 3.2%. Total income from operations grew 13.3% to Rs 666 crore.

“The same store sales growth was positive but this was the second consecutive quarter when margins are below 10%. Historically margins have been above 15%,” said Sachin Bobade, senior research analyst at Dolat Capital Markets.

Unless the same store sales growth rises to 7-8%, operating margins will not improve, said Bobade.

The stock has fallen nearly 30% in the last one year amid weak earnings performance. Recently, its chief executive Ajay Kaul, who is perceived as an architect of the company’s strong supply chain and operational excellence, had announced that he would be stepping down from his role. This further dampened investor sentiment for the stock.

On the technical parameters, the stock has been consistently trading below its 200-day simple moving average. Currently, the 200-DSMA is at Rs 1,145.41