Jubilant FoodWorks, the powerhouse behind India’s largest pizza brand, Domino’s, has been on a remarkable stock market rally, particularly in the first week of January 2024. On January 6, shares of Jubilant FoodWorks surged for the fourth consecutive day, climbing as much as 5% to reach a fresh 52-week high of ₹796 per share. This upward momentum has been driven by a strong update for the December quarter, or Q3FY25. The update further fueled investor optimism about the prospects of the company. It has gained 11% over the last four days, reflecting robust market confidence in the growth trajectory of the brand.
In this blog, we will discuss the factors that led to the rally in Jubilant FoodWorks’ stock, analyze the company’s performance in the latest quarterly results, and look at what experts say about its future growth prospects. Let’s break down the key drivers behind the recent surge in Jubilant FoodWorks’ share price and what it means for investors in the QSR (Quick Service Restaurant) sector.
Jubilant FoodWorks’ Strong Q3FY25 Performance
One of the reasons behind the surge in Jubilant FoodWorks is its remarkable Q3FY25 business update. Jubilant FoodWorks reported an outstanding 56% YoY growth in consolidated revenue for the December quarter, with consolidated revenue coming in at ₹2,156 crore, against ₹1,381 crore reported for the same quarter last year. This has been driven by multiple factors, such as the success in expansion, which has maintained robust demand for all its offerings, especially for Domino’s India.
The Q3FY25 performance was also supported by the acquisition of DP Eurasia, the master franchisee of Domino’s Pizza in Turkey, Russia, and several other countries in the region, by Jubilant FoodWorks. This strategic acquisition has significantly contributed to the company’s top-line growth, adding an international revenue stream to the domestic growth story. On a standalone basis, the revenue of the company has increased by 19% YoY at ₹1,611 crore. The figure is robust, given the competitive market environment in the food service industry.
Key Performance Highlights:
- Consolidated revenue up by 56% YoY at ₹2,156 crore
- Standalone revenue up by 19% YoY at ₹1,611 crore
- Like-for-like growth for Domino’s India stands at 12.5%.
Expansion of global footprint with 130 new stores added to its network, bringing the total number of outlets to 3,260 worldwide
Domino’s India Continues to Lead Growth
Domino’s India is Jubilant FoodWorks’ prime growth driver and by showing resilience even in tough economic conditions, the brand has good momentum. Domino’s India operates more than 2,100 stores and showed like-for-like sales growth of 12.5% in the Q3FY25 period. This means that the brand is going very well because consumers still continue to come back to them for dining and delivery.
Another such payoff for the company has been its expansion strategy. By December 2024, Jubilant FoodWorks had added 130 new stores under its global portfolio; 60 were added from the Indian market only of Domino’s. The company’s total number now stands at 3,260 globally, including stores in India as well as markets abroad like Turkey and Russia.
However, growing the food chain in the traditional pizza business alone cannot be considered the growth story of Jubilant FoodWorks. The company has immensely gone beyond that and contributed to the shifting choices of its consumers. With a wide variety of choices between pizzas, sides, and beverages, Domino’s was able to sustain a leadership position in the QSR market in India.
Expansion Strategy: Taking it to New Heights
Jubilant FoodWorks had been aggressively expanding its footprint across India, right from metropolitan cities to smaller towns. In a short span, the company added 130 new stores to increase its market share in India’s fast-growing QSR segment. It has, for long, been focusing on tier 2 and tier 3 cities, where the appetite for quick-service meals is constantly growing.
The expansion has not been limited to just physical stores; the company has also been investing in enhancing its delivery infrastructure. With delivery being a significant contributor to its revenue, Jubilant FoodWorks has been making efforts to expand its reach through new logistics models, improving delivery times and customer service.
The company’s strategy also includes maintaining a focus on digital transformation. With the growing importance of online orders, Jubilant FoodWorks has continued to invest in improving its mobile and web ordering platforms, ensuring customers have a seamless and efficient experience.
Positive Analyst Sentiment and Target Price Upgrades
The strong Q3 performance and the expansion of Jubilant FoodWorks’ footprint have attracted positive attention from analysts and investors alike. One of the notable developments in recent weeks was the upward revision of target prices by major brokerage firms.
1. Jefferies Increases Target Price to ₹1,000
A global brokerage firm, Jefferies, has recently upgraded the target price for Jubilant FoodWorks shares to ₹1,000 from ₹800, reflecting its optimistic view about the company’s growth prospects in the future. According to Jefferies, same-store sales (SG) are likely to grow in the mid-to-high single-digit range, which is good news for the company’s ability to continue generating steady growth in the near to medium term. The brokerage firm believes that the margins of Jubilant FoodWorks are now poised to recover from the lowest level seen in early 2024, as the company enjoys improved operational efficiencies and cost optimization strategies.
2. Kotak Institutional Equities Revisions
Kotak Institutional Equities, remaining positive on Jubilant FoodWorks, hiked the target price to ₹675 from ₹650 but maintained a ‘Reduce’ rating on the stock, citing that the valuations might be slightly expensive in the near term.
3. HDFC Securities and Other Brokerages
HDFC Securities has given an “Add” rating to the stock with a target price of ₹690. The brokerage expects HDFC to rebound strongly in terms of operational performance in FY25 with good recovery in SSSG and cost optimization measures, which will support the enhancement of margins.
4. Stock Price Growth over the Previous Month: 15.6%
Over the past month, the stock price of Jubilant FoodWorks has rallied 15.6%, ahead of the benchmark Sensex that has fallen by 2%. Most of the growth in the stock price is credited to better financials, expansion plans, and positive analyst recommendations for the company. Investor confidence has surged on account of strong quarterly results, an expanding store network, and the seamless integration of the DP Eurasia acquisition.
However, the stock is still far from its all-time high of ₹915.49 per share, which it achieved on October 13, 2021. The lowest price in the history of the stock was ₹16.16, recorded on February 8, 2010, showing how much the company has grown since its IPO.
Challenges and Risks to Monitor
While Jubilant FoodWorks’ stock has enjoyed a strong upward trajectory, analysts caution that there are still risks and challenges ahead. Some of the primary challenges include:
- Inflation and Rising Costs: Rising raw material costs, especially for ingredients, may impact profit margins in the near term.
- Competition: QSR space is inherently competitive, and several brands are competing for a share of the market. An increase in competition will also help keep the company from sustaining the extreme growth rate in the long term.
- Operational Efficiency: While Jubilant FoodWorks has been working at improving its operational efficiency, maintaining such efficiency at thousands of stores spread over large and increasing areas would demand more focus and investment.
Future Prospects for Jubilant FoodWorks
Looking ahead, Jubilant FoodWorks remains well-positioned for continued growth, particularly with its strong brand presence and leadership in the pizza segment. The company’s ongoing expansion plans, both in India and internationally, as well as its focus on enhancing operational efficiency, give it a solid foundation to continue outperforming in the fast-growing QSR sector.
The ability of Jubilant FoodWorks to maintain strong same-store sales growth and improve profitability through cost optimization will be the key drivers of its stock price shortly. Analysts are still predicting continued growth, making the stock an attractive option for those looking to invest in the fast-food and QSR industry.
Conclusion
Jubilant FoodWorks seems on a sound growth trajectory on the back of strong quarterly results, the expanding store network, and a dominant position in the Indian pizza market. A recent spurt in its stock price, fueled by a combination of strong performance and analyst upgrades, underlines the company’s strong prospects in the QSR sector. As is true for all businesses in any highly competitive, constantly changing industries, Jubilant FoodWorks must face inflationary pressures as well as greater competition and increasing operating difficulties. Nonetheless, Jubilant’s focus on expansion, innovation, and efficiency stands the company well for continued capture of the significant growth in the Indian food service market.
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