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Accumulate Jubilant Foodworks, target price Rs 1,903: Geojit

The brokerage expects gradual recovery in the medium-term with online sales leading the growth.

ETMarkets.com|
Last Updated: May 29, 2020, 02.14 PM IST
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Geojit has given an accumulate rating to Jubilant Foodworks with a target price of Rs 1,903. Jubilant posted subdued growth in Q4FY20 standalone revenue (+3.8 per cent year on year to Rs. 898 crore), as operations were impacted since mid-March amid Corona-led lockdown. In response to the ongoing covid crisis, Jubilant has launched its zero contact delivery business model.

Investment Rationale

According to the brokerage, with stringent health & hygiene measures adopted in restaurants, Jubilant can effectively reduce the number of contact points and deliver safely to the customers which will help revive the sales going forward. Also, currently, with prices of inventory coming down due to low demand, Jubilant can save more in terms of inventory spending which the brokerage believes will translate into margin recovery. It expects gradual recovery in the medium-term with online sales leading the growth. Hence, it has an Accumulate rating on the stock with a target price of Rs 1903.

Financials

For the quarter ended March 31, 2020, the company reported consolidated sales of Rs 908.75 crore, down -15.18 per cent from last quarter sales of Rs 1071.36 crore and up 4.12 per cent from last year's same quarter sales of Rs 872.82 crore. The company reported net profit after tax of Rs 32.53 crore in the latest quarter.

Promoter/FII Holdings

Promoters held 41.94 per cent stake in the company as of March 31, 2020, while FIIs held 30.94 per cent, DIIs 21.05 per cent and public and others 5.88 per cent.
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