On Thursday, Kotak analyst updated the price target for Jubilant Foodworks Ltd (NS:JUBI:IN), increasing it to INR690 from the previous INR540. Despite the higher price target, the Reduce (3) stock rating remains unchanged. Following a recent meeting with Jubilant Foodworks' CFO Suman Hegde, Doshi shared several insights into the company's strategy and performance.
Jubilant Foodworks, known for operating Domino's Pizza (NYSE:DPZ) in India, is intensifying its focus on the brand and aiming for higher volume growth. The company is also working on margin expansion, which is expected to be a gradual process due to ongoing investments. In addition, the company's approach to Popeyes includes prioritizing profitability and adjusting its store expansion strategy.
The analyst anticipates that Domino's will see an acceleration to high single-digit or double-digit like-for-like revenue growth in the second half of the year. In light of these expectations, the revenue forecast for Domino's has been increased, and earnings estimates have been adjusted. The fair value (FV) estimate has been rolled over, leading to the new price target of INR690.
The report concludes with a note on valuation, mentioning that the current expensive valuation of Jubilant Foodworks' shares is a factor that prevents the analyst from adopting a more positive stance, even though Domino's India is showing signs of recovery.
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