On Thursday, Jefferies, a global investment banking firm, adjusted its outlook on Jubilant Foodworks Ltd (JUBI:IN) shares, revising the company's price target to INR 475.00 from the previous INR 500.00. Despite this change, the firm maintained a Hold rating on the stock.
The adjustment comes after Jubilant Foodworks, which operates the Domino's Pizza (NYSE:DPZ) brand in India, exhibited some level of stabilization in its like-for-like (LFL) and same-store sales (SSS) during the fourth quarter.
However, the company's earnings before interest, taxes, depreciation, and amortization (Ebitda) margins shrank to a multi-quarter low, reflecting some operational challenges.
The report noted that while delivery trends have shown improvement, the dine-in segment of the business has been facing severe pressure. In response to these challenges, management has been proactive, making strategic decisions aimed at driving growth, including those that may be difficult in the short term.
The inclusion of DP Eurasia in Jubilant Foodworks' portfolio is seen as a significant strategic move, transforming the company from a primarily India-focused entity to one of the largest emerging market franchises. The onus now lies with the management to leverage this expansion and create value from the overseas business segment.
Following these developments, Jefferies has trimmed its estimates for Jubilant Foodworks but has chosen to maintain a Hold rating, indicating a neutral stance on the stock's immediate growth prospects. The revised price target reflects the firm's updated assessment of the company's performance trajectory and market conditions.
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