Markets India
Jubilant FoodWorks shares fell 5% after Q2 FY27 results, but brokerages like MOFSL and Nuvama reiterated their BUY ratings, citing strong growth potential and margin improvements.
Jubilant FoodWorks' shares declined 5% following the release of its Q2 FY27 results, with the stock hitting a low of ₹427.70. However, brokerages maintained their bullish stance, highlighting the company's 5-7% LFL growth potential and margin improvements from supply chain efficiencies. Consolidated revenue surged 11.8% YoY to ₹2,607.88 crore, while standalone revenue grew 11% YoY. Gross margin expanded 110 basis points YoY to 75.5%, driven by pricing strategies and reduced wastage. The company added 88 Domino’s and 11 Popeyes stores in India, reaching a total of 2,728 locations. MOFSL and Nuvama reaffirmed their BUY ratings, with target prices of ₹625 and ₹614 respectively, citing strong Popeyes momentum and international performance.
The revenue growth and margin expansion signal operational resilience against inflation, bolstering brokerages' confidence in Jubilant's long-term growth. However, the share price decline reflects short-term market skepticism about sustaining momentum amid rising input costs. Store expansion plans could enhance market share but require capital investment and operational scalability. Analysts note that while inflationary pressures on LPG, labor, and chicken may strain margins, the company's productivity initiatives and pricing strategies could offset these challenges. Annual store additions of 300 align with market expansion goals, though success depends on franchisee participation and market saturation.
Jubilant's management faces the dual challenge of balancing growth with cost control. While the company's international performance and Popeyes momentum provide growth levers, the ability to maintain margin improvements amid inflation will determine its long-term success. The stock's volatility also raises concerns for retail investors, who may be deterred by short-term price swings.
MOFSL and Nuvama maintain BUY ratings with target prices of ₹625 and ₹614, respectively. Jubilant plans to add 300 stores annually, with Popeyes seeing slightly higher expansion. Brokerages will monitor FY27/28E revenue and EBITDA revisions.
Despite a 5% share price decline, brokerages remain bullish on Jubilant FoodWorks' long-term growth, citing margin recovery and expansion plans, though inflationary pressures pose a key challenge.
Topics: Markets, India, Food & Beverage, Stock Market, Corporate Earnings, Brokerage Analysis, Retail Investment, Supply Chain Efficiency
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Source: Business Standard
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