Jubilant Foodworks shares tank 6% post Q3 results

Shares of Jubilant Foodworks tanked 6 per cent to hit an intraday low of Rs 3,097 on BSE after the company posted its earnings for the quarter ended December 2021.
 
Jubilant Foodworks Ltd (JBL), which operates fast-food chains Domino’s Pizza and Dunkin’ Donuts, reported a 9.8 per cent year-on-year (YoY) rise in net profit at Rs 137.3 crore.
 
Revenue from operations grew 12.9 per cent to Rs 1,193.5 crore on the back of an improved recovery in dine-in channel, which was supported by continued strong momentum in delivery channel, the company said.
 
The stock opened a tad higher at Rs 3,306 against the previous close of Rs 3301.25. With a market capitalisation of Rs 42,900 crore, the shares stand lower than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
 
Brokerage house HDFC Securities said that Jubilant reported a miss on revenue; however, EBITDA margin was a beat. The company opened the highest number of Domino’s stores (75) in Q3; however, expansion in other brands was slow, as it added one store each of Hong’s Kitchen and Dunkin. Further, it opened two Popeye’s stores in Jan-22.
 
“Jubilant has already proved itself in building a strong franchise (Domino’s); now replicating the same across other organic and franchisee brands will be a key monitorable for the stock. We marginally cut FY23/24 EPS by 2 per cent. Our target price is Rs 3,300, based on 60x P/E on Dec-23E EPS for Domino’s India and Rs 300 per share for ex-Domino’s India. With the recent correction, we upgrade from SELL to REDUCE,” it added.
 
Motilal Oswal said Jubilant FoodWorks (JUBI) reported largely in-line sales and margins, even as like-for-like (LFL) was lower than expected. The management has shared both LFL and same-store sales growth (SSSG) numbers for many quarters thus far. The decision to stop the SSSG disclosure is puzzling, especially as the management has commented that there is no large difference between SSSG and LFL and the gap between the two is unlikely to increase.
 
“We remain bullish on JUBI on the back of its best-of-breed metrics and established right-to-win. We maintain our Buy rating with a target price of Rs 4,200 per share (33x FY24E EV/EBITDA),” the brokerage firm said.
 
The company’s board also approved the splitting of its equity share having face value of Rs 10 each into 5 equity shares having face value of Rs 2 each, subject to the approval of the shareholders.
 
Splitting the shares in 1:5 equity ratio will enhance the liquidity of the company’s shares and encourage the participation of small investors by making it more affordable. JBL expects the stock split to be completed within 3 months of receiving approval from the shareholders of the company.