Informist, Friday, Nov. 8, 2024

By Arya S. Biju

MUMBAI – Despite weak demand in the quick-service restaurant segment, Jubilant Foodworks Ltd. is expected to report a relatively better performance in the September quarter than its peers. The company's performance for the quarter is seen driven primarily by strong growth in its delivery channel, according to analysts.

Despite this, the food service provider is seen posting an on-year decline in its net profit owing to higher depreciation and interest costs, subdued store productivity, and a fall in average order value, analysts said. The company is expected to report a net profit of INR 551.27 million for the September quarter, down 23.6% on year, according to an average of estimates from 11 brokerages. The highest estimate for the company's net profit is INR 659 million by Nuvama Wealth Management Ltd., and the lowest is INR 368 million by HDFC Securities Ltd. In the year-ago period, Jubilant Foodworks had reported a net profit of INR 721.48 million, down 39.5% on year.

The company's revenue for the quarter is expected to rise 13% on year to INR 15.19 billion, according to estimates. The highest estimate for the top line is INR 19.3 billion by Emkay Global Financial Services Ltd. and the lowest INR 14.52 billion by HDFC Securities. In the year-ago quarter, the company had reported a revenue of INR 13.45 billion, up 4.5% from the previous year.

Revenue of the quick service restaurant chain operator is expected to be driven by strong traction in delivery channel post-delivery fee waiver, refurbished stores driving better footfall, and faster growth in new formats – Popeyes and Hong's Kitchen.

The master franchisee of Domino's brand of pizza in India, Bangladesh, Sri Lanka, and other countries is expected to report a low-single digit like-for-like growth in the quarter. Like-for-like sales represent adjusted growth which includes revenue generated from stores or products with similar characteristics while omitting any distinct differences that could skew the numbers.

Same-store sales growth of most of the quick-service restaurant companies was under pressure with sustained inflation continuing to impact discretionary spending, Antique Stock Broking Ltd. said. The brokerage, however, expects Jubilant Foodworks to report same-store sales growth of 2%, while other quick-service restaurant companies are expected to report a fall in the quarter. Same-store sales are a financial metric used to evaluate the total value of sales in the company's stores that have been operating for a year or more. The company is expected to add close to 50 stores in the quarter, according to analysts.

Emkay Global expects Jubilant Foodworks to outperform its peers with a lower 1?cline in same-store sales growth against a 3-8?cline expected from other companies in the segment. This will be aided by delivery waiver, marketing, and successful new launches by the company, Emkay Global said. Similarly, HDFC Securities expects Jubilant Foodworks to report flat same-store sales growth against the low to mid-single digit decline in same-store sales growth expected from its peers, owing to its delivery segment contributing 70% to total sales, initiatives to improve dine-in experience, and new product launches.

Analysts expect the company to report a dip in its gross margin for the quarter on a year-on-year basis because of increase in cheese and milk prices, advertisement expenses, higher share of value portfolio, new product launches with low margin, and the impact of delivery fee waiver. The earnings before interest, tax, depreciation, and amortisation of the company for the September quarter is seen at INR 2.86 billion, according to an average of estimates from nine brokerages.

The food service provider will announce its earnings for the September quarter on Monday. On Friday, shares of the company closed at INR 607.25 on the National Stock Exchange, up 1.8% from the previous day.

Following are the Jul-Sept earnings estimates of Jubilant Foodworks based on reports compiled by Informist from 11 brokerage houses (in INR million):

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Edited by Ashish Shirke

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