Jubilant FoodWorks stock zooms 9% to hit 31-month high on solid Q1 numbers; is it time to buy?

Shares of Jubilant FoodWorks, which operates fast-food chains Domino's Pizza and Dunkin' Donuts, jumped 9.1% in today's intraday trade to hit a 31-month high ₹653.40 apiece after investors reacted positively to the company's June quarter numbers, which were released on Friday, and came above the analysts estimates.

The company achieved a revenue increase of 9.9% year-on-year, reaching ₹1,440 crore. However, the EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margins declined by 178 basis points year-on-year to 19.3%. The profit after tax (PAT) stood at ₹52 crore as compared to ₹29 crore in the same period of last year.  

Domino’s India demonstrated 3% like-for-like (LFL) growth, driven by a robust 12.1% LFL growth in delivery. The company’s strategic initiatives contributed to this performance, including a 17.5% year-on-year increase in monthly active users, a loyalty membership nearing 25 million, and a 32% rise in new customer acquisitions. 

The Domino’s app saw record-high monthly users of 12.1 million customers (grew by 17.5% year over year). Domino’s cheesy reward customer base stood at 24.9 million in Q1 FY2025. Cheezy reward members’ revenue contribution has gone up to 55% from 45% earlier. 

The company has not taken price increase in the last eight quarters, and is unlikely to take any price hikes in the near term, and would focus on improving the offtakes and frequency of orders in the store.

The company is also focusing on improving the dine-in LFL, which grew by 1.7% on a Q-o-Q basis on account of double-digit growth in orders. The company has introduced a 4-course meal at ₹99 to generate footfalls during lunch hours. Refurbished stores are seeing 10-12% growth. 

During the quarter, other brands within the portfolio—Popeyes, Dunkin’, and Hong’s Kitchen—expanded their networks and introduced new products. Its consolidated revenues surged by 44.8% year-on-year to ₹1,933 crore, primarily due to the integration of DP Eurasia. 

DP Eurasia’s revenue grew by 34.5% year-on-year to ₹461 crore. In international markets, Domino’s Turkey reported 10.3% LFL growth, COFFY achieved 8.7% LFL growth, and Domino’s Bangladesh and Sri Lanka also saw double-digit growth. 

JFL expanded its footprint by adding 66 stores across various brands and markets during the quarter, bringing the total store count to 3,057 by the end of Q1 FY2025.

The company said it will add 180 stores of Domino’s and 20–25 stores of Hong’s Kitchen in India. Dominos and Popeyes will be key growth drivers, while Dunkin’ and Hong’s Kitchen will act as good additions to the brand portfolio. 

Should you buy the stock post-Q1 numbers?

Following the company's June quarter performance, domestic brokerage firm Centrum Broking retained its 'buy' rating with a revised target price of ₹716, which signals an upside of 26% from the company's previous target price.

The brokerage suggests that the company has strategically consolidated its valuable international business at an opportune moment. By capitalising on DP Eurasia’s growth potential and the profitable COFFY brand, Jubilant FoodWorks aims to enhance profitability and sustain long-term growth.

The company's revitalised strategy for driving growth in the Domino’s and Popeyes segments, combined with improvements in the value segment consumer experience, is expected to foster positive Like-for-Like (LFL) growth. While weak demand, increased competition in the pizza Quick Service Restaurant (QSR) sector, and rising inflation present short-term challenges, the brokerage anticipates that Jubilant FoodWorks will maintain its current margin levels.

Given the positive turnaround in operating performance, the brokerage has raised its FY25E and FY26E standalone earnings estimates by 6.9% and 6.8%, respectively. 

Likewise, Sharekhan has also retained its ‘buy’ rating on the stock with a target price of ₹721 apiece.  "The stock is currently trading at 27x and 23x its FY2025E and FY2026E consolidated EV/EBIDTA, respectively. A consistent improvement in the performance would give further push to the valuations," said the brokerage.

Disclaimer: The promoters of HT Media Ltd, which publishes Mint, and Jubilant Foodworks are closely related. There are, however, no promoter cross-holdings.

The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.