Jubilant Food Share Price Target 2022

Jubilant Foodworks Limited (JUBLFOOD), the master franchisee of the Domino’s Pizza and Dunkin’ Donuts brands in India, has been of immense interest to investors in 2022, as the company’s shares have attracted significant attention due to their strong growth prospects and favorable market factors.

As one of the largest food service industries in India, Jubilant Foodworks has demonstrated flexibility and the ability to thrive in a competitive quick-service restaurant (QSR) industry. This paper examines the share price appreciation, analysts’ projections for 2022, and the reasons behind the market expectations for Jubilant Foodworks.

Stellar Performance in a Recovering Market

Jubilant Foodworks has demonstrated excellent financial performance in the fiscal year 2021-22, benefiting from the COVID-19 rebound within the food and beverage industry. The organization achieved a consolidated sale of ₹ 4,396.12 crores in 2022, representing a remarkable growth of 32.7% year-over-year, following a consumption of ₹ 3,311.87 crores in 2021.

The rise in demand for Domino’s Pizza contributed to this increase and was accompanied by business strategies that included quick deliveries, online innovations, and menu diversification. As evidenced by the net profit of ₹ 428.49 crore, the company demonstrated not only the ability to generate revenue but also to convert it into profit, with an 86 percent increase in net profit between 2021 and 2022 (from ₹ 230.52 crore to ₹ 428.49 crore).

Jubilant Foodworks, whose stock is traded on the NSE and BSE, with the symbol JUBLFOOD, has experienced some notable volatility in 2022. As of February 2022, it currently trades at around Rs. 635.65 and has a market capitalization of Rs. 42,094.82 crore. Its high price in the stock market was the 52-week high of $ 796.75, and the low price was $ 552.05, showing that the stock had a broad trading range subject to market effectiveness and macroeconomic performance.

Price Targets by Analyst for 2022

Analysts have expressed optimism about the growth pattern of Jubilant Foodworks, with several brokerage firms recommending a buy rating and setting an aggressive price target for 2022. Axis Securities, one of the leading brokerages, has stated that the target price for Jubilant Foodworks is 705 Indian rupees, implying an increase of more than 10% in its value by February 2022.

The bullish sentiment is supported by the company’s solid fundamentals, with a high return on equity (ROE) of 21.61% in 2022 and a record of revenue growth compared to previous years. There are other price target estimates for 2022, ranging from $ 650 to $ 750 by different analysts, and as high as $ 800 by some of them.

Such optimism is informed by the fact that Jubilant Foodworks has continued to open new stores at a very high rate; a move that has seen it open 1,995 Domino’s stations in 421 cities within India and consequently enter the new markets in Sri Lanka, Bangladesh, and Nepal. Its entry into Barbeque Nation Hospitality Limited with a 10.76% share does not hinder its growth. The homegrown brand Hong’s Kitchen is another growth opportunity.

Key Drivers of Share Price Growth

There are several reasons that the share price of Jubilant Foodworks is performing in 2022:

Digital Transformation and Delivery Focus: Jubilant Foodworks has placed a significant bet on technology, offering free delivery and a redesigned loyalty program that drive customer acquisition. The company’s digital policy raised like-for-like sales by 12.1% in Q4 FY22, surpassing other fast-food chains such as KFC and McDonald’s.

Expansion Plans: Jubilant Foodworks is actively expanding its presence and plans to launch 1,000 new Domino branches by FY28. Additionally, 100 Popeye units are set to be launched in India. The company’s international businesses, particularly its presence in Sri Lanka and Bangladesh, have performed well, with Jubilant Foodworks in Sri Lanka recording a 71.7% growth in demand in Q4 FY22.

Brand Diversification: The Incorporation of Popeyes and Hong’s Kitchen has given the Jubilant Foodworks brand diversification, eliminating its dependency on revenue from Domino’s. Specifically, Popeyes has become the second-largest chicken QSR chain globally, utilizing an exclusive Louisiana-style Cajun flavor.

Good Financial Results: Jubilant Foodworks has a solid balance sheet, notwithstanding a high debt-to-equity ratio of 0.06 in 2022. The price-earnings (P/E) ratio of 193.87 and price-to-book (P/B) ratio of 21.19 imply that the company is priced at a premium level and investors are optimistic about its future growth.

Challenges and Risks

Jubilant Foodworks has experienced an excellent performance; however, the company faces some challenges that may impact its share price in 2022. Increased costs of inputs, especially on dairy and fuel, have strained margins of profitability.

The company’s net profit margin of 4% in FY22 is not particularly high, indicating an opportunity to optimize costs. Moreover, market share may be threatened by the competitive forces of its rival companies, such as Devyani International, Westlife Food World, and Sapphire Foods India.

Risk to profitability may be posed by geopolitical uncertainties in the international markets, where Jubilant has its operations in Turkey, including Domino and Popey electables. Nevertheless, the company is confident in achieving stabilized economies in these areas.

Investor Sentiment and Shareholding Pattern

Confidence among investors in Jubilant Foodworks is also high, with promoters currently owning 41.94 percent as of June 2022, which is an indication of their long-term commitment. This means that many institutions support it, with 29.8% owned by Foreign Institutional Investors (FIIs) and 17.2% by Domestic Institutional Investors (DIIs). The fact that the stock has a beta of 0.98 indicates moderate volatility compared to the market, making it an ideal choice for investment, especially for risk-takers.

2022 Prospects

In the long run, Jubilant Foodworks is also well-positioned to capitalize on the expanding QSR market in India, driven by urbanization, rising disposable income, and a shift towards convenience foods.

Its frenetic growth and digital programs are likely to maintain mid-teens revenue growth in FY23, according to the company’s analysts. However, it is prudent for investors to remain cautious of inflationary pressures and competitive forces that are likely to erode short-term returns.

Those who consider investing in this corporation should take a firm stance on Jubilant Foodworks. Strong operational efficiency, brand innovation, and customer acquisition make the company a leader in the QSR industry. The stock has a balanced risk-reward ratio with a 2022 median analyst price target of 705.