The Jubilant FoodWorks stock was up around 5 per cent even when the overall market was down and volatile on account of profit-booking after hitting new highs in the previous sessions.

Year-to-date the stock is up 37 per cent without any improvement in financial performance. Same store sales growth (SSSG) and net profit declined 2.4 per cent and 37 per cent in FY17, respectively.

The stock has gained 24 per cent since implementation of the Goods and Services Tax from July 1.

The company, which operates Domino’s Pizza and Dunkin’ Donuts restaurants in India, will come under lower GST rate of 18 per cent vs 21 per cent earlier, the benefits of which will be passed on to customers. The company has also guided for no-price-hike in FY18.

Note-ban bruise

Investors are lapping up the stock as the lingering demonetisation effect (delivery-focussed players such as Jubilant were badly bruised), which ruined the March 2017 quarter performance, had abated in the June 2017 quarter. “Normalcy was visible only in end-March,” pointed out Manoj Menon, analyst at Deutsche Bank.

There are expectations of better financial performance in the June 2017 quarter (to be announced on Monday) — first quarter under the new CEO Pratik Pota (ex-PepsiCo official).

Investors are keenly watching the effect (though marginally) of focus/priorities of the new CEO: product improvement/ innovation, improvement in ‘value for money’ propositions for customers, enhancement of customer experience across all formats (ordering/ delivery/ dine-in), investment in technology, operational efficiency, calibration of store expansion to 40-50 stores (91 added in FY17), higher sales from existing stores, closure of non-performing stores and improvement in profitability by cutting redundant costs.

SSSG which dived in the previous quarter (de-growth of 7.5 per cent) is expected to show a pick-up from the June quarter and financial performance is likely to show an improvement (in the coming quarters) due to the above efforts.

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