UBS upgrades Jubilant FoodWorks to ‘buy’, says valuation attractive

UBS has, however, kept its target price on Jubilant Foodworks unchanged at Rs 600 a share

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Global research and broking firm UBS has upgraded its rating on Jubilant FoodWorks, the India franchise of Domino’s Pizza in India to “buy”. The stock is trading at a 30 percent discount to its five-year average valuation, making it an attractive entry point for investors, it said in a report.

At 12.15 pm, Jubilant FoodWorks was flat at Rs 440. The stock has corrected 25 percent in the past six months due to weak demand trends in the quick service restaurant (QSR) space along with margin pressures due to high prices of milk and wheat.

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“The company plans to continue its growth trajectory through aggressive store additions, regular capital expenditure to strengthen the supply chain, focus on new brands, superior operational efficiencies, use of technology, and a better value proposition,” UBS said.

The firm has kept its target price on the stock unchanged at Rs 600 per share, modelling a revenue/EBITDA/EPS compounded growth of 19 percent/22 percent/33 percent over FY23-27. In this time period, Jubilant might add ~800 stores of Domino’s.

The stock is trading at 40x FY25 estimated earnings, compared to 5-year average PE of 57x.

UBS’ upgrade comes days after Citi’s report on the stock.

Citi believes Jubilant Foodworks has the best in class unit economics, consumer and store base and delivery expertise among quick service restaurant (QSR) peers.

It too has a “buy” rating with a target price of Rs 619 a share.

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