Why Domino's operator Jubilant FoodWorks rose 8% despite 32% fall in Q2 PAT

Jubilant FoodWorks shares jumped 8.1 per cent in trade on Tuesday and registered an intraday high of Rs 650.95 per share on BSE. 

 

However, around 9:58 AM, Jubilant FoodWorks shares shed some gains and were up 7.15 per cent at Rs 644.9 per share on BSE. In comparison, the BSE Sensex was down 0.01 per cent at 79,491.86. The market capitalisation of the company stood at Rs 42,124.52 crore. The 52-week high of the stock was at Rs 715.15 per share on BSE and 52-week low of the stock was at Rs 420.85 per share.

 

On Monday, after market hours, Jubilant Foodworks reported a consolidated net profit of Rs 66.53 crore in the second quarter as compared to Rs 97.2 crore a year ago, down 31.5 per cent.

 

Even though a dip in profit the Domino’s Pizza operator's stock climbed as in a joint statement, Jubilant FoodWorks Chairman Shyam S Bhartia, and Co-Chairman Hari S Bhartia said the company sustained broad-based momentum in Q2 and grew its network to 3,130 stores by adding 139 stores across brands and markets.  The management also said its financial results for the current periods are not comparable with that of previous periods as its subsidiary Jubilant Foodworks Netherlands B.V. had acquired controlling stake in DP Eurasia N.V. (DPEU) during the period ended March 31, 2024 and pursuant to which, the group has accounted for its investment in DPEU. 

 

Meanwhile, the company's consolidated revenue from operations in the second quarter stood at Rs 1,954.72 crore, as compared to Rs 1,368.63 crore in the year-ago period.

 

The total expenses in the second quarter were at Rs 1,895.67 crore as compared to Rs 1,290.17 crore in the same quarter of the previous fiscal.

 

In the international market, revenue from operations was at Rs 460.5 crore although revenue from Domino's Bangladesh came in at Rs 12.6 crore, lower by 5.3 per cent on account of temporary store closures amidst a challenging operating environment. All stores are now operational, it added.

Brokerage view on Jubilant FoodWorks 

HDFC Securities has maintained an 'Add' rating on the stock with a target price of Rs 650 per share. 

 

"Management’s ability to scale up newer format such as Popeye, Dunkin Donuts and Hong Kitchen can unlock another leg of value creation," the brokerage said. 

 

Motilal Oswal iterated a 'Neutral' rating on the stock with a target price of Rs 625 per share.

 

"The growth recovery still looks more gradual, and operating margin would see slower recovery," brokerage report read.

 

In the past one year, Jubilant FoodWorks shares have gained 18.4 per cent against Sensex's rise of 22 per cent.