Shares of Jubilant FoodWorks dipped 5 per cent to Rs 455.90 on the BSE in Thursday’s intra-day trade after the company reported a 70 per cent decline in consolidated net profit at Rs 28.54 crore in the March quarter (Q4FY23), impacted by higher expenses and raw materials cost.
The country’s largest foodservice company had posted a consolidated net profit of Rs 96 crore in the year-ago quarter.
Consolidated revenue from operations grew 8.2 per cent year-on-year (YoY) to Rs 1,252 crore from Rs 1,158 crore in Q4FY22. Reported consolidated earnings before interest, taxes, depreciation and amortization (ebitda) declined 12.9 per cent YoY at Rs 252 crore; Ebitda margin contracted 488 bps YoY at 20.1 per cent.
The company’s sales grew during the quarter, led by footprint addition, but were weak like-for-like (LFL), down 0.6 per cent, led to a decline in Ebitda and net profit.
There are near term concerns around historic high inflation and slowing market growth, but the management is confident on its unique ecosystem’s ability to tap on the potential that lies ahead and reorient the business to deliver sustained profitable growth.
Jubilant FoodWorks holds the exclusive master franchise rights from Domino's Pizza Inc for India, Sri Lanka, Bangladesh and Nepal, besides exclusive rights to develop and operate Dunkin' restaurants in India and Popeyes restaurants in India, Bangladesh, Nepal and Bhutan.
Analysts at Motilal Oswal Financial Services said they broadly maintain our revenue/PAT estimates for FY24/FY25. The raw material cost pressure (cheese) may continue for few quarters and the management indicated that it may refrain from price hikes as the near-term environment looks challenging.
The new CEO’s efforts on improving dine-in LFL growth, his decision not to hike prices amid the transient high-cost environment in wheat and cheese, building the technological and analytical edge of JUBI are welcome moves that will create value in the medium term.
The brokerage firm believes there are strong long-term opportunities in QSR and JUBI with its moats is poised to take advantage of the same. After a steep stock price correction of around 25 per cent from its peak, valuations appear reasonable at ~28x FY25E EV/EBITDA for a business which has ROE superior to QSR peers and other retail companies.
