Shares of Jubilant FoodWorks surged 7 per cent to Rs 1,527 on the BSE on Wednesday, and were up 12 per cent in the past two trading days, after the company reported double digit revenue growth, along with a sequential improvement in margins in September quarter (Q2FY20). The stock hit a 52-week high today, surpassing its previous high of Rs 1,518 touched on September 23, 2019.
The company, the master franchisee of Domino’s Pizza and Dunkin’ Donuts in India, reported a better-than-expected 12 per cent year on year (YoY) growth in net sales at Rs 988 crore in Q2FY20. Analysts on an average expected net sales at Rs 964 crore for the quarter.
Net profit, however, declined 2.2 per cent YoY during the quarter at Rs 76 crore due to one-time expense on account of provisioning for investments made by Jubilant FoodWorks Employee Provident Fund Trust in corporate bonds of stressed firms such as Dewan Housing Finance Corporation (DHFL), Reliance Capital & IL&FS.
Meanwhile, EBITDA (earnings before interest, tax, depreciation and amortization) margin improved 50 bps to 23.8 per cent from 23.3 per cent reported in the previous quarter. Jubilant FoodWorks picked up intensity in network expansion this quarter as it opened 40 new Dominos stores and closed 6 stores.
"Overall operating environment continues to be weak in the near term. The company has been experiencing slowdown in dine-in business for the last few quarters now which has been to some extent compensated by good growth in the delivery business in recent times," analysts at Nirmal Bang Equities said.
“Company’s own initiatives - strategy of fortressing markets, investment in data science to improve customer service and efficiencies, railway ordering, innovations and focus on delivering value to the customer will help maintain its dominant position in the space," it noted, adding Jubilant FoodWorks has been one of the biggest beneficiaries of corporate tax rate reduction which gives it room for spending on promotions to tackle competition.
Further, the foray into the Chinese fast casual segment and a good response from new markets like Bangladesh presents opportunities for future growth, it added.
At 10:38 am, Jubilant FoodWorks was trading 6 per cent higher at Rs 1,522 on the BSE, as compared to a 0.35 per cent rise in the S&P BSE Sensex. A combined 1.86 million shares have changed hands on the counter on the BSE and NSE so far.