Dunkin Donuts might not deliver for Jubilant in near term: Nomura

But says investors can buy stock as the company's quick service restaurants are poised for secular long-term growth

Dunkin Donuts brand might not deliver for Jubilant Foodworks in near term, according to a research note by Nomura.

After meeting the management of the company, Nomura said, "The sense we got from the meeting was that there could be some disappointment in the near term as the business model is likely to take time to establish."

However management said, Dunkin for Jubilant Foodworks remains a key long-term investment and would be the second pillar of growth for the company and it will take two years to establish itself.

The company is hopeful to break-even in three-four years however the store level break-even would be acheived in the first year itself.

This could have the effect on overall earnings of the company and limit the operating leverage for Jubilant.

Jubilant remains condfident about the scalibilty of its pizza brand Domino’s and increasing its penetration across the country. It now has presence in 112 towns and cities compared to 100 an year ago.

Company is also open to sign new brands and is in the process of identifying new opportunities. However, the announcement is unlikely in near future.

Nomura said investors can buy the Jubilant stock as the company's quick service restaurants are poised for secular long-term growth, even though Dunkin’ may be a drag on profitability in the near term.