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Target: ₹500
CMP: ₹518.10
We interacted with Sameer Khetarpal, the CEO of Jubilant FoodWorks, to understand industry demand and company strategy. According to him, the QSR industry demand continues to decelerate and recent trends are tougher than witnessed during the last six months. The pressure is across markets, brands, and formats. Signs of stress on demand are witnessed even in tier 2/3 cities with mall food courts wearing a deserted look. Moreover, one additional month of Sawan is expected to further dampen SSSG in Q2-FY24.
However, the industry remains hopeful of a bounce-back in demand in H2FY24 on the back of softening inflation; expected pick-up in the festive season; and the cricket World Cup.
In the ongoing challenges, Jubilant remained focused on further strengthening its core (customer acquisition, menu, 20-minute delivery, etc.).
In our model, we do not build sharp recovery in the SSSG/ADS during H2FY24 (for all brands), as we do not expect a quick bounce-back in footfall/frequency. We also do not expect demand to spur due to the cricket World Cup as the impact on the dine-in business (less footfall) will alter pick-up in the delivery business.
We remain cautious about demand and margin outlook for the QSR sector. The recent stock rally has further made risk-reward unfavourable.
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