Brokerages split on Jubilant FoodWorks amid margin concerns; stock tanks 6%

Brokerages have a mixed outlook on food service company Jubilant FoodWorks following its inaugural analyst meet in 2025, where the company discussed its strategic growth initiatives and future expansion plans. 

 

The company’s CEO Sameer Khetarpal stressed three key priorities, including Domino’s, Popeyes, and People, which are expected to drive long-term value. Store expansion is a central part of its strategy, with plans to open an additional 1,000 Domino’s stores by FY28, aiming to reach a total of 3,000 stores across 700 cities by FY28, up from the current 2,139 stores across 466 cities. 

 

The company also plans to set up four more commissaries by FY28 and is focusing on an integrated supply chain with in-house sourcing of key ingredients. New product launches, like Big Big Pizza and Cheesy Rice, are expected to boost consumer engagement. 

 

 

For Popeyes, the focus is on improving unit economics through higher average daily sales (ADS). The company’s investments in backward integration, in-house manufacturing, and proprietary data tools like Store.AI are seen as key competitive advantages.

 

Despite the optimism surrounding growth, many brokerages are concerned about Jubilant FoodWorks’ margin outlook. The company guided a 200bp profit after tax (PAT) margin expansion by FY28, which some analysts view as disappointing given the high growth expectations. 

 

Motilal Oswal, for example, maintained a ‘Neutral’ rating on the stock with a target price of Rs 715, noting that while its revenue and profit estimates are in line with management’s guidance, margins may be constrained.

 

Nuvama, too, expressed a similar outlook, noting the company’s aggressive growth in store openings and the potential of Store.AI to drive expansion. However, they also highlighted the relatively modest margin guidance, leading them to revise their estimates. 

 

“We are tweaking estimates to account for accelerated store openings and lower margin scale-up. Our revised SotP-based target price is Rs 776; maintain ‘Buy’,” analysts at Nuvama said, in a note.

 

According to reports, Jefferies was more optimistic, maintaining a ‘Buy’ rating with a target price of Rs 1,000. Analysts at Jefferies highlighted Jubilant FoodWorks’ investments in backward integration as a key differentiator, although they acknowledged that the margin guidance might disappoint some investors.

 

On the other hand, Macquarie reportedly downgraded its stance to ‘Underperform’, cutting its target price from Rs 640 to Rs 575. They were disappointed by the company’s slower-than-expected margin recovery, especially given the 200bps PAT margin expansion guidance, which was weaker than expected. They also cut earnings estimates for FY26 and FY27 by 4 per cent.

 

CLSA also maintained an ‘Underperform’ rating, lowering its target price to Rs 450, according to reports. They expressed concerns about the current valuation premium, which they believe doesn’t account for the risks posed by increasing competition. CLSA revised its earnings estimates for FY25-27 by 0-5 per cent downwards.

 

JPMorgan, maintaining a ‘Neutral’ stance, reportedly cut its target price to Rs 670.9 from Rs 700, highlighting the company’s strong initiatives but acknowledging that valuations could cap the stock’s upside potential.

 

Lastly, Morgan Stanley took a more favourable view, maintaining an ‘Overweight’ rating and setting a target price of Rs 781. They noted the company’s strategic and tactical decisions have led to a strong recovery, outpacing peers. They expect continued top-line growth driven by improved like-for-like (LFL) sales and profitable growth.

 

That said, while Jubilant FoodWorks is recognised for its aggressive expansion and technological advancements, brokerages remain divided over its margin growth and valuation.

 

On the bourses, Jubilant FoodWorks’ share tanked as much as 5.95 per cent to hit an intraday low of Rs 630.60 per share. However, at 11:30 AM, Jubilant FoodWorks’ share was off day’s low and was trading 4.88 per cent lower at Rs 637.80. In comparison, BSE Sensex was trading 1.26 per cent lower at 73,670.54 levels.