Shares of Jubilant FoodWorks down 28% in 2022; challenge for new leadership

AgenciesUpdated: Tuesday, March 22, 2022, 07:20 PM IST
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The brokerage said though the stock always enjoyed premium valuations historically, now it remains to be seen how it tackles fierce competition and rising inflation under the new leadership. / Representative image | Photo credit: IANS

Shares of quick service restaurant Jubilant FoodWorks fell 28 per cent in the year-to-date period of 2022.

The stock of Jubilant Foodworks witnessed heavy selling amidst large volumes last week after Pratik Pota resigned from the post of CEO and whole-time Director.

"During his tenure of 5 years, the stock generated almost 10X returns before starting a downtrend in October 2021," said brokerage house Ventura Securities.

The brokerage said though the stock always enjoyed premium valuations historically, now it remains to be seen how it tackles fierce competition and rising inflation under the new leadership.

"If the company manages to maintain its growth and profitability momentum, the market reaction may improve," it said.

Jubilant Foodworks runs the franchisee of Domino's Pizza in India and other neighbouring countries, such as Sri Lanka, Bangladesh and Nepal. It also operates Dunkin' Donuts and Popeyes restaurants, and has its own brands, such as Hong's Kitchen and biryani brand, Ekdum.

In the past five years, shares of Jubilant FoodWorks rose around 390 per cent.

Path to high profit growth is distant and difficult and except for Jubilant Foodworks, no other quick service restaurant company has clocked stable double-digit profit margins so far.

Domino's Pizza, which is Jubilant's mainstay, has around 1,500 restaurants spread across the country and has been aggressively growing its footprint. Over the last 5 quarters, the company has added around 50 outlets every quarter on an average.

"Now that the fear of the pandemic and potential waves has started receding, it remains interesting to see if the dine-in growth accelerates. If the brand maintains high growth rates in delivery and takeaways and revives dine-in revenues, the per-store revenue might show a remarkable improvement," said the brokerage.

On Tuesday, the shares of the company settled 3.4 per cent higher at Rs 2,638.7.

(With inputs from IANS)

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