On February 1, Jubilant FoodWorks witnessed a 3 percent decline in its shares following a downgrade by Motilal Oswal from ‘buy’ to ‘neutral.’ The brokerage firm expressed concerns that the current valuation fails to encompass the full impact of earnings pressure on the company.
Motilal Oswal cited expectations of near-term soft demand, indicating that the operating print may not see improvement in the foreseeable future. Additionally, ongoing backend investments, particularly the establishment of commissaries in Bangalore and Mumbai, are anticipated to further strain the company’s profit before tax margin.
The brokerage firm highlighted persistent demand challenges in the industry, impacting growth metrics for Jubilant FoodWorks.
In its financial report for Q3FY24, Jubilant FoodWorks disclosed a weak sales growth of 3 percent YoY, amounting to Rs 350 crore. This subdued performance was influenced by a like-to-like decline of 2.9 percent. While the delivery business showed a modest increase of 6 percent, the dine-in segment contracted by 5 percent during the same period. The earnings report underscores the challenges faced by the company amid evolving market dynamics and consumer preferences.
