Nuvama bets on QSR, jewellery sectors post Q3, picks Jubilant, Titan, Trent

Nuvama has picked Jubilant, Trent, V-Mart, Titan, and Aditya Vision as its top bets going forward, highlighting their strong performances and promising outlook

Domestic brokerage firm Nuvama Institutional Equities (Nuvama) is placing its bets on the jewellery and Quick Service Restaurant (QSR) sectors post December quarter of FY25 (Q3FY25) results. 

 

The brokerage has picked Jubilant, Trent, V-Mart, Titan, and Aditya Vision as its top bets going forward, highlighting their strong performances and promising outlook. 

 

“Q3FY25 results were highlighted by a strong QSR segment with a positive outlook and continued strong performance in jewellery, with margin surprises from Titan, Kalyan, and PNG,” said Rajiv Bharati, Abneesh Roy and Ashish Vanwari of Nuvama, in a note.

 

However, not all sectors witnessed the same level of success. The apparel category, for instance, was a mixed bag, failing to capitalise on the festive boost that many had anticipated. 

 

 

Brands like Page Industries, which had shown promise in the earlier quarter, faltered, while others like Vedant Fashion continued to struggle in Q3FY25 after a brief uptick in demand in Q2FY25. 

 

In contrast, value fashion retailers such as V-Mart and V2 Retail stood out, posting robust like-for-like (LFL) growth, driven by higher volumes and footfalls. 

 

Moreover, ABFRL’s ethnic portfolio performed above expectations, reflecting strong growth. 

 

Trent, however, saw its momentum slow slightly due to its store consolidation strategy for Westside and Zudio, leading to a dip in LTL growth from double-digit to high single-digit numbers. On the other hand, Madura’s lifestyle brands led the industry in LTL growth, with all brands delivering double-digit increases.

 

QSR space

 

The QSR sector, though still showing overall growth, had a muted quarter, analysts said. Despite this, the results were sequentially better, thanks to strategic efforts from various companies in the space. 

 

While most QSR players reported negative Same-Store Sales Growth (SSSG), Jubilant stood out with an impressive industry-leading LFL growth of 12.5 per cent, Nuvama highlighted. The company implemented several strategic initiatives, including a stronger focus on its cheese portfolio with items like the cheese burst and Volcano Pizza, increased marketing investments, competitive discounts on aggregator platforms, and even free delivery offers. 

 

Despite the cautious stance across the board, the store addition trajectory remained steady, except for Pizza Hut, which adopted a more cautious approach. Restaurant Brand Asia (RBA), although still in negative SSSG territory, improved from -3 per cent in the previous quarter to -0.5 per cent.

 

Footwear

 

According to analysts, the footwear segment struggled with soft revenue growth. Relaxo, in particular, saw a decline in sales. However, companies in the sector are focusing on cost control and enhancing operational efficiency. Bata is also working on Zero-Based Merchandising to improve store inventory management, while Metro Brand’s premium category and Bata’s Hush Puppies are faring much better.

 

Electronics retailing

 

The electronics retailing sector, despite the seasonally strong quarter, witnessed slower growth due to muted demand post the festive season, analysts at Nuvama said. Aditya Vision, however, managed to achieve double-digit growth, driven by healthy SSSG. 

 

Electronics Marts (EMIL), on the other hand, faced challenges as its core region of Hyderabad saw a decline in sales due to lower demand for large appliances. Analysis noted that margins were under pressure for EMIL due to lower productivity and increased overhead costs from the addition of new stores. Aditya Vision, although posting double-digit SSSG, experienced a dip in overall margins due to lower gross margins on extended festive offers.

 

Outlook

 

Analysts at Nuvama expect that Q4FY25 will not bring a major improvement over Q3, especially with wedding season demand not living up to expectations. 

 

Despite this, they remain optimistic about the QSR sector, with Jubilant FoodWorks emerging as their top pick, as they expect operating leverage to come into play with improving average daily sales (ADS). 

 

Within the apparel sector, analysts continue to favour Trent and V-Mart. And in the jewellery space, Titan remains a strong recommendation, given its solid performance.

 

That said, while Q3FY25 was disappointing in several areas, particularly in the apparel and electronics segments, the QSR and jewellery sectors stood out as areas of promise. With a careful selection of stocks like Jubilant, Trent, V-Mart, and Titan, Nuvama’s outlook remains cautiously optimistic, particularly for the months ahead.