CLSA has reiterated its ‘Underperform’ rating on Jubilant FoodWorks, setting a target price of ₹445, indicating a potential 26% downside from the current market price (CMP) of ₹602.60. Key insights from CLSA’s analysis of Jubilant’s Q2 performance include:
- Sales and EBITDA: Both sales and EBITDA came in below estimates, with Domino’s sales per store declining by 1.1% year-on-year. Same-store sales growth (SSSG) of 2.8% was slightly below expectations.
- Shift to Delivery: Domino’s introduced free delivery for orders above ₹150, prompting a shift from dine-in to delivery. This trend has been dilutive to EBITDA margins but has led to a rise in monthly active users (MAUs) on Domino’s app.
- Outlook: Management anticipates an acceleration in SSSG for Q3 but remains cautious on margins. CLSA has cut its FY25-27 earnings estimates by 17-32%, reflecting the impact of a delivery-heavy sales mix, a slower rollout of Popeye’s, and rising costs.
Disclaimer: This information is for informational purposes only and does not constitute financial advice.