On Thursday, Jefferies analyst increased the price target on Jubilant Foodworks Ltd (NS:JUBI:IN) to INR1,000 from INR880, while reiterating a Buy rating on the stock. The optimism is based on an anticipated recovery in the company's same-store sales growth (SSSG), supported by a low base effect and internal improvement measures.
Jubilant Foodworks, which faced significant challenges in previous quarters, is now expected to see SSSG rise to a mid-to-high single-digit range in the upcoming quarters. This comes after a period where the company's Ebitda margin reached its lowest point early in the calendar year 2024 but is now forecasted to improve. However, margins are not expected to return to their previous highs as management focuses on growth over margins.
The analyst noted that the company's outlook is brightening and that the Ebitda margin, which had already bottomed out at the start of the calendar year 2024, is set to further improve. Despite the fact that margins may not reach their prior peak levels, Jefferies appreciates the management's strategy to prioritize growth, which underpins their conviction in maintaining a high-conviction Buy rating with the revised INR1,000 price target.
Maheshwari's commentary highlights the strategic decisions by Jubilant Foodworks' management to invest in growth initiatives rather than solely concentrating on margin expansion. This approach is expected to bear fruit in terms of sales growth in the near future, as indicated by the revised price target and positive stock rating.
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