Jubilant FoodWorks Shares Rise 9% After Robust Q1 Results; What Should Investors Do Now?

Jubilant FoodWorks share price today hit over a two-year high of Rs 645 on the BSE on Monday. Jubilant Food shares surged 8 per cent on the BSE in the intraday trade after the company reported standalone sales growth of 10 per cent year-on-year (Y-o-Y) to Rs 1,440 crore in the June 2024 quarter (Q1FY25), mainly driven by 8.5 per cent growth in Domino’s India.

Domino’s like-for-like (LFL) growth was 3 per cent, and same-store sales also turned positive (at ~1.5-2.0 per cent) after six quarters. A total of 52 net stores were added across all brands in India.

The stock of the food service company was trading at its highest level since February 2022. In the past four months, the stock price of Jubilant FoodWorks has appreciated 44 per cent. The average trading volume on the counter more-than-doubled with a combined 10.46 million equity shares changing hands on the NSE and BSE till 12:02 pm.

In Q1FY25, JFL’s gross margin was up marginally (10bp Y-o-Y to 76.1 per cent), while earnings before interest, tax, depreciation and amortisation (Ebitda) margin contracted 180bp Y-o-Y to 19.3 per cent. This contraction is attributed to increased investments in technology, supply chain enhancements, and adverse operating leverage. Additionally, the company has intensified its value proposition by offering free delivery, Motilal Oswal Financial Services said in its result update.

Non-Domino’s portion of Jubilant’s business has also started to do well. The Emerging business reported revenue of Rs 28.5 crore during the quarter. The company added eight new Popeyes stores during the quarter, taking the total number to 50. It also added five new Hongs stores, taking the total to 33 at the end of the June quarter.

The company’s business in Eurasia also performed well during the quarter, with DP Eurasia reporting revenue of Rs 461.4 crore during the quarter. Even Domino’s Turkey reported Like-For-Like growth of 10.7 per cent year-on-year during the quarter, while COFFY saw Like-For-Like growth of 8.7 per cent compared to the year-ago period.

Brokerage firm Kotak Institutional Equities in its post-earnings note said that while the improvement in Domino’s Like-For-Like growth is encouraging, it is driven by a waiver of delivery fees and value means in dine-in. It added that while Jubilant Foodworks is moving in the right direction, it would want for better valuations or a decisive QSR recovery to turn more constructive on the stock.

It therefore maintained its “reduce” recommendation on the stock with a price target of Rs 540.

Out of the 32 analysts that have coverage on Jubilant Foodworks, 15 of them have a “buy” rating, eight say “hold”, while nine of them have a “sell” rating.