On Thursday, Jubilant Foodworks Ltd (JUBI:IN) sustained an Underperform rating with a steady price target of INR300.00 from Macquarie for the shares, after reporting fourth-quarter earnings that did not meet analyst and market expectations.
The company's Ebitda (earnings before interest, taxes, depreciation, and amortization) for the fourth quarter of fiscal year 2024 fell short due to higher expenses which negated the impact of better-than-expected same-store sales and gross margins.
The reported Ebitda miss occurred despite Jubilant Foodworks' same-store sales showing marginal growth and maintaining relatively flat gross margins sequentially. This was noteworthy as the company offered free delivery during the quarter, which did not adversely affect gross margins as one might expect. The same-store sales for non-split stores inched up by 0.1% compared to a 2.9% decline in the third quarter.
Jubilant Foodworks' performance in same-store sales growth stood out against its competitors. In comparison, Pizza Hut, operated by Devyani and Sapphire Foods, experienced a significant decline in same-store sales, dropping by 14% and 15% respectively.
Additionally, KFC stores, also operated by Devyani and Sapphire, saw a decline of 7% and 3% in their same-store sales. Westlife Development's McDonald's (NYSE:MCD) in South and West India reported a 5% decrease in the same period.
Despite the positive aspect of sales, the company's fourth-quarter results were overshadowed by the rise in other expenses. These costs ultimately offset the gains from sales and margins, leading to the Ebitda underperformance.
The maintenance of the Underperform rating and INR300.00 price target reflects a cautious outlook for Jubilant Foodworks' stock, as the firm's analysis indicates that the company's financial performance may not align with market expectations.
The rating and target suggest that the firm advises investors to temper their expectations for the company's stock performance in the near term.
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