Brokerage firm Prabhudas Lilladher has kept a 'Buy' rating on Jubilant FoodWorks despite recent profit pressure. While accounting adjustments in international operations impacted earnings, analysts highlight strong expansion in the Popeyes brand as a key driver for future growth.
Prabhudas Lilladher has reaffirmed its 'Buy' stance on Jubilant FoodWorks, setting a target price of Rs 532 per share. This update comes after the company released its second-quarter earnings for the 2027 fiscal year, which revealed a mix of revenue growth and challenges in profitability.
Performance Highlights and Profit Pressure
Jubilant FoodWorks reported a 12% increase in consolidated revenue, reaching Rs 2,608 crore for the quarter. While this shows that consumer demand remains steady, the company saw a 42% decline in net profit compared to the same period last year, bringing the figure to Rs 108 crore. This sharp drop in bottom-line profit was largely due to accounting adjustments related to hyperinflation in the DP Eurasia business, which covers the company's international operations.
Popeyes Expansion and Outlook
A key positive factor highlighted by analysts is the performance of the Popeyes franchise. The brand recorded a 53% growth in same-store sales during the second quarter. The company aims to sustain this momentum by opening 40 to 45 new Popeyes stores. Based on these expansion plans and expected operational efficiencies, the brokerage projects a 44.4% compound annual growth rate for earnings per share between the 2027 and 2029 fiscal years.
Key Risks to Monitor
Despite the optimistic long-term view, investors should be aware of several headwinds affecting the business. The company's operating margin, or EBITDA margin, declined by 83 basis points to 19.7% during the quarter. This pressure was driven by rising input costs, particularly for key items like dairy, chicken, and vegetables. Additionally, the coffee segment is facing intensified competition and higher commodity costs, which have softened performance in that category.
Looking ahead, the international business remains a variable due to inflationary accounting in Turkey, which could continue to affect consolidated results. The ability of the management to protect margins while expanding its store network, particularly for the Popeyes brand, will be a crucial area for investors to track in the coming quarters.