SynopsisAccording to Motilal Oswal Financial Services, Jubilant has been the biggest success story in the Indian quick-service restaurant industry, driving growth with its delivery-based business model.
Mumbai: Analysts raised their price targets on Jubilant Foodworks by 8-30 per cent after the company on Wednesday reported a 22 per cent increase in consolidated profit to Rs 124 crore in the quarter ended December 2020 from the year-ago-period.
The management of Jubilant, which operates Domino’s Pizza and Dunkin’ Donuts chains in India, has shifted its focus to growth by lifting capacity restrictions in dine-in, said analysts. “Jubilant’s structural interventions on cost structures, scale-up of digital assets and focus on innovation and store expansion bode well to capitalise on the post-Covid environment,” said a note by Axis Capital while revising the target price to Rs 3,000 from Rs 2,644.
The stock has rallied 30 per cent in the last three months to close at Rs 2,825 on Thursday.
According to Motilal Oswal Financial Services, Jubilant has been the biggest success story in the Indian quick-service restaurant industry, driving growth with its delivery-based business model. “Post-Covid, its longer-term prospects appear even brighter with a faster shift toward organised players in the Indian food service industry while increased usage of technology by customers facilitates growth for players like Jubilant,” said a note by Motilal Oswal Financial Services.
The stock is currently trading at valuations of 72 times its FY22 earnings, which analysts said are expensive. But they expect return ratios to improve further with better store economics for its delivery and takeaway-focused new stores.
“Its timely investments in technology should help drive further market share gains benefiting from a reduction in overall industry supply in the restaurant space,” said Yes Securities. “We see the company getting back to its 20 per cent plus earnings growth trajectory with return on equity again moving up above 35 per cent.”