Jubilant Food dips 13% in 2 days, hits lowest level since Dec'20 on weak Q3

The stock hit 52-week low today after the historic high inflation in cheese and flour prices significantly impacted gross margins, which came in at 75.5%, lower by 213 bps year-on-year

Shares of Jubilant FoodWorks hit 52-week low of Rs 425, slipping 7 per cent on the BSE in Thursday's intra-day trade. In the past two trading days, the stock has slipped 13 per cent after the restaurant company, which operates fast-food chains Domino's Pizza and Dunkin' Donuts, reported weak operational performance for the quarter ended December 2022 (Q3FY22). It was trading at its lowest level since December 2020.

Jubilant Foodworks reported sales growth of 10 per cent year-on-year (YoY) to Rs 1,332 crore with LFL (like-for-like) growth at 0.3 per cent YoY. LFL defined as year-over-year growth in sales for non-split (mature) restaurants opened before previous financial year.

The company's profit after tax declined 32.2 per cent YoY to Rs 80.40 crore from Rs 133.2 crore in Q3FY22. Earnings before interest, tax, depreciation, and amortisation (Ebitda) contracted 490 bps YoY and 228 bps sequentially to 21.5 per cent.

Jubilant FoodWorks reported modest top-line growth as LFL growth for Domino's was flat. The historic high inflation in cheese and flour prices had significantly impacted gross margins, which came in at 75.5 per cent, lower by 213 bps year-on-year and 77 bps quarter-on-quarter.

"Sameer Khetarpal, the new CEO, announced his plans to focus on value (introduction of Every Day Value Pizza at Rs 49), improving dine-in experience by re-imaging stores rapidly, introducing cost saving measures and building on the excellent response that they have received in their recently launched loyalty program (~10m customers contributing ~40 per cent of business in Dec’22). LFL growth recovery and material cost reduction are expected to take some time, putting pressure on near-term earnings," Motilal Oswal Financial Services said in a result update.

Jubilant FoodWorks' own delivery system, back-end advantages, robust balance sheet, and now the loyalty program all provide the company a competitive edge, leading to a healthy topline and earnings growth in the medium term, the brokerage firm added.