Investors are gradually nibbling Jubilant Foodworks after being wrecked by weak June quarter performance followed by CEO exit. Shares of the pizza company climbed 3 percent intraday on Friday. Still, the stock is around 41 percent down from its 52-week high touched at Rs Rs 1689.30 almost a year ago on 06 October, 2015. The stock has lost 19 percent in a month’s time.
After Domino’s Pizza and Dunkin’ Donuts franchise owner analysts meet Motilal Oswal says that second quarter of FY17 will surely be positive due to launch of Burger Pizza. It says the management has assured that working with vendors will drive efficiencies in supply chain. However, it will await for more clarity to emerge before turning constructive.
ICICI Securities maintains sell rating with target of Rs 895 per share stating that same store sales growth (SSSG) is on a decline and margin levers are reducing.
JP Morgan has an overweight rating with a target price at Rs 1155 per share. Impressed by the management’s assurance that CEO Ajay Kaul’s departure will not impact business operations it says that the company’s empanelment as official catering partner with IRCTC will aid revenues.
The company posted its worst quarterly performance in April-June since its listing. Amidst concern, few analysts turned negative on the stock. Jubilant Foodworks reported revenue, EBITDA and adjusted PAT growth of 7 percent, (-) 14 percent and (-) 31 percent in Q1. Its Q1 operating margins dropped 230 basis points (bps) in the domestic business with a SSSG decline of 3.2 percent YoY. Its Q1 EBITDA margin at 9.5 percent is the lowest since the IPO in FY10.
Posted by Nasrin Sultana
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