Growth, margin recovery ahead for Jubilant FoodWorks as demand improves

Improving Domino's India demand, strong growth at Popeyes and better execution are expected to support revenue growth and margin recovery in the September quarter

After being a market underperformer over the past year, the stock of Jubilant FoodWorks has recovered somewhat over the past month, gaining about 19 per cent during this period to ₹498. While 2026-27 (FY27) first-quarter (April-June/Q1) revenue performance was soft at the standalone level, the food technology and quick-service restaurant company is confident that the second quarter (July-September/Q2) will be better than Q1, on the back of like-for-like (LFL) growth, healthy international performance, and domestic traction in global fried chicken brand Popeyes. Brokerages are positive on the stock, expecting a sequential improvement in revenue as well as a recovery in margins in Q2. At the current price of ₹496, the stock is trading at 52x its 2027-28 (FY28) earnings estimates.

 

The company’s standalone revenues saw sluggish 9 per cent growth year-on-year (Y-o-Y). The gains were led by Domino’s India, which delivered 7.4 per cent growth on the back of a 2.5 per cent increase in LFL growth and 6.5 per cent order growth. Though LFL trends have improved sequentially (0.2 per cent in the fourth quarter, or January-March/Q4), inflationary pressures weighed on demand trends. While average daily sales rose 2 per cent Y-o-Y, about three-fourths of revenues came from deliveries, and this channel saw 12 per cent growth.

 

The company indicated that it had gained 80 basis points (bps) of delivery share Y-o-Y, driven by investments in value, innovation, and digital engagement. Growth was backed by innovation, which helped broaden the customer proposition with the launch of Chicken Maxxx, ready-to-drink cold coffee, and single-serve dessert mousse cups. The Domino’s India store network reached 540 cities, with the company expanding into 19 new cities during the quarter. Jubilant remains confident about demand trends and expects Q2 to be better than Q1, targeting 5-7 per cent LFL growth. 

 

Analysts led by Devanshu Bansal of Emkay Research believe that Jubilant’s 2.5 per cent LFL growth for Domino’s India in Q1 was a combination of 7-8 per cent LFL growth in the delivery channel and a 10 per cent dip in dine-in LFL growth. The optimism around a pickup in LFL growth is likely stemming from conscious efforts to turn around dine-in LFL through leadership investments, improved service levels, Best of the Deals (on Wednesdays) and a focus on single-eating occasions, the brokerage said. It has a ‘buy’ rating with a target price of ₹600.

 

What stood out among Jubilant’s multiple franchise brands was Popeyes. Revenues of the fried chicken brand nearly doubled Y-o-Y, backed by 45 per cent LFL growth for the third consecutive quarter. Average daily sales rose by half, while gross margins for Popeyes increased by 113 bps to 67.4 per cent. The company believes its superior product, owing to its marination process and use of fresh chicken, product launches, nimble supply chain, and strong store-level execution have enabled strong performance over the past three years. The management believes that Popeyes could be its second growth engine and aims to scale up the brand to more than ₹1,000 crore in revenue (Q1 revenue at ₹70 crore) over the next three-four years.

 

Given the Q1 showing and outlook, Nuvama Research has revised its FY27 and FY28 revenue estimates upwards by 1.4-1.7 per cent, while increasing its operating profit estimates by 2.7 per cent to 6.4 per cent. It has a ‘buy’ rating and a higher target price of ₹668, compared with ₹646 earlier.

 

Aided by sharper execution, the company expanded its overall gross margin by 133 bps Y-o-Y to 75.5 per cent. It mitigated the impact of inflationary pressures on operating profit margin through selective pricing (net price rise of 140 bps) and operational productivity, limiting the decline to 18 bps and bringing the margin to 19.5 per cent.

 

Equirus Securities expects margins to move northwards sequentially and, if the West Asia war ends, expects sizeable upside to its estimates. Over the past year, there was a sharp correction in the stock price, first due to margin pressures and then due to growth concerns, said analysts at the brokerage, led by Deep Shah. They expect better performance, with management guiding for 5-7 per cent LFL growth. The brokerage is positive on the stock and has a target price of ₹574.