Jubilant FoodWorks has reported 8.6 percent jump in its Q4FY19 net profit at Rs 73.9 crore. The company had reported a net profit of Rs 68 crore last year same quarter.
Most global brokerage firms maintained their rating on Jubilant FoodWorks
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after March quarter results, but CLSA slashed its target price on earnings cut for FY20-21.
Jubilant FoodWorks has reported an 8.6 percent jump in its Q4FY19 net profit at Rs 73.9 crore. The company had reported a net profit of Rs 68 crore last year same quarter.
The company said its books have also suffered a one-time loss of Rs 7.9 crore because of closed stores in Sri Lanka.
The operational revenue of the company rose 11 percent at Rs 865 crore against Rs 780 crore year ago. The company said Domino's same-store-sales growth (SSG) was at 6 percent.
Earnings before interest, tax, depreciation, and amortization (EBITDA) was up 15 percent at Rs 147.6 crore against Rs 127.7 crore, while margin was at 17.1 percent versus 16.4 percent, YoY.
Analysts at the top brokerage firms are of the view that earnings could see a dent in FY20-21, and even the SSG was also below estimates. Hence, investors holding Jubilant should continue to hold as the long-term story still remain intact.
Here’s what global brokerage firms recommend for Jubilant FoodWorks:
Credit Suisse: Neutral| Target: Rs 1,350
Credit Suisse maintained its neutral call on Jubilant FoodWorks with a target of Rs 1,350. The Q4 Adj PAT grew by 20 percent on a YoY basis which was in-line with estimates.
The SSG of 6 percent was significantly below the estimate of 8-9 percent. The margin expanded despite low SSG on 170 bps gross margin expansion, said the note.
The global investment bank slashed FY20/21 estimates by 4-5 percent to build in lower SSG. Going forward, there could be a cut in reported earnings of FY20.
CLSA: Buy| Cuts target to Rs 1,500 from Rs 1,600 earlier
CLSA maintained its buy rating on Jubilant FoodWorks but slashed its target price to Rs 1,500 from Rs 1,600 earlier.
The SSG misses estimates but a higher margin and other income are likely to drive earnings beat going forward, it said. The SSG of 6 percent is much lower than CLSA and consensus forecasts.
The mid-single-digit SSG raises the concern of a slowdown amid heightened competition.
The company’s outlook remains positive on its long-term opportunities, but for the short term, CLSA slashed its EPS estimates for FY20-21 by 7-11 percent.
Morgan Stanley: Overweight| Target: Rs 1,525
Morgan Stanley maintained its overweight call on Jubilant FoodWorks with a target price of Rs 1,525.
Domino's opened over 100 new stores in FY19 and the trend should continue in FY20 as well. The new store addition will drive over 6 percent revenue growth in FY20.
The cost headwinds are emerging, but it has enough levers to mitigate the impact, said the Morgan Stanley note. There is an opportunity to flex the pricing lever in FY20.
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