homemarket Newsstocks NewsJubilant FoodWorks rallies 6% as brokerages hope for strong recovery post Q4 earnings

Jubilant FoodWorks rallies 6% as brokerages hope for strong recovery post Q4 earnings

Jubilant FoodWorks rallies 6% as brokerages hope for strong recovery post Q4 earnings
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By Ankit Gohel  May 21, 2020 2:12:35 PM IST (Published)

Shares of Jubilant FoodWorks, that owns the master franchise for Domino's Pizza in India, surged almost 6 percent in the early trade on Thursday.

Shares of Jubilant FoodWorks, that owns the master franchise for Domino's Pizza in India, surged almost 6 percent in the early trade on Thursday after brokerages maintained bullish view on the company on expectations of strong recovery with better execution capabilities.

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The stock surged 5.93 percent to hit an intraday high of Rs 1,614.80 apiece on the BSE. At 1:59 pm, the shares were trading 2 percent higher at Rs 1,554 per share.
“Credible brand positioning with strong technology investment, coupled with a consumer behavior trend towards food delivery should aid market share gains for Jubilant FoodWorks, in our view. Also, given its scale, it is in better-positioned to leverage its leading position to further improve its unit economics,” CLSA said in a note.
CLSA retained 'Buy' rating on the stock and raised its target price (TP) to Rs 1,850 from Rs 1,800 earlier. At a 44x FY22CL, the brokerage believes it is not cheap but it has to be viewed in the context of its growth potential.
Morgan Stanley maintained 'Overweight' rating with a TP of Rs 1,900 per share as it believes the company’s preparedness for new normal and cost control should drive speedy recovery going ahead
Credit Suisse maintained 'Outperform' call with a TP of Rs 1,625 per share. The brokerage cut FY21/22 earnings for Jubilant FoodWorks by 2-8 percent after Q4 earnings.
Credit Suisse believes that the cost control measures taken by the company post COVID are positive. The brokerage expects deliveries to pick up which is the company’s area of strength.
Jubilant FoodWorks reported a nearly 72 percent fall in standalone net profit at Rs 21 crore in Q4FY20 from Rs 73.9 crore in the same period last year.
Revenue from operations during the quarter rose marginally to Rs 897.9 crore as against Rs 865.2 crore, YoY. Domino’s like-for-like (LFL) sales growth in Q4FY20 fell to -2.3 percent, while same-store growth (SSG) came at -3.4 percent.
EBITDA rose 14.7 percent to Rs 169.5 crore as against Rs 148 crore, while EBITDA margin expanded by 180 bps to 18.9 percent from 17.1 percent, YoY.
The company had a strong revenue performance until February 2020. However, there was a sharp drop in revenue in March due to the COVID-19 pandemic and the consequent national lockdown impacted the overall quarter’s performance adversely, the company said.
Jubilant FoodWorks said it has a strong cash position, a strong balance sheet and it continues to generate healthy free cash flow.
"The coronavirus has brought about a once-in-a-lifetime crisis to society and business in general, and the restaurant industry in particular. We have taken a number of immediate steps to mitigate the impact of the virus on our business in the short term. In the longer term, we remain positive on the opportunity in the QSR space. Our strong balance sheet and the strength of our business model will ensure that we contain the adverse effects of the virus and come out stronger,” said Shyam Bhartia, Chairman and Hari Bhartia, Co-Chairman, Jubilant FoodWorks in a statement.
 
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