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Shares of Jubilant FoodWorks, which runs the Domino’s chain of restaurants in India, dropped 5.26 per cent on Wednesday as an 18 per cent crash in the share price of the global peer Yum Brands on Tuesday impacted sentiments.
Intraday, Jubilant’s shares tanked around 6 per cent.
Yum Brands, which operates the Pizza Hut and KFC restaurants worldwide, missed third quarter earnings estimates, especially due to sluggish growth in China — its major market.
In India also, the company’s sales declined 9 per cent led by a sharp 18 per cent decline in same store sales growth (SSSG) in the September quarter.
However, Bank of America Merrill Lynch expects Jubilant’s SSSG to rise 6.5 per cent in the September quarter, followed by improvement in margins due to better operating leverage. The foreign brokerage firm estimates a target price of ₹2,100 on the stock.
While Indian brokerage firm Nirmal Bang upgraded its rating on the stock to ‘buy’ from ‘accumulate’, Geojit BNP Paribas revised its target price upwards by 13 per cent to ₹1,920. Both firms came out with their reports in September.
‘Slow recovery’ However, Nomura had advised (September 16 report) investors to reduce their position due to the ‘slow recovery’ in urban consumption and weak performance in the first quarter of the current fiscal. “While new data reveals that Dunkin’ has had a good launch so far, we are doubtful with regard to its long-term success due to the ongoing intense competition in the space,” it added, though it revised the target price upwards to ₹1,282 from its earlier target price of ₹1,120.
Though directly not comparable, Jubilant’s share prices are down 10 per cent since Coffee Day Enterprises, which operates the biggest coffee chain in India with 1,500-odd stores under the brand name Café Coffee Day received SEBI’s nod on August 17 for a ₹1,150-crore IPO. The market buzz is that a lot of demand is shifting to Coffee Day’s IPO from Jubilant FoodWorks.
Coffee Day Enterprises is slated to launch its IPO on October 14.
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