Jubilant FoodWorks Q4 Result Review: A Cheesy Double Whammy For Domino's Pizza Chain Operator

The company's gross margin declined by 164 basis points year-on-year in Q4 due to increase in cheese prices.

<div class="paragraphs"><p>(Source: Jubilant Foodworks Website)</p></div>
(Source: Jubilant Foodworks Website)

Jubilant FoodWorks Ltd.'s sales growth is expected to remain weak given the slowdown in demand in the near term and rising cheese prices, according to analysts.

The revenue of the Domino's Pizza chain operator rose 8.2% in the fourth quarter ended March. Its gross margin declined 164 basis points year-on-year during the quarter ended March 31 due to an increase in cheese prices.

Ebitda margins were the lowest since Q1 FY21, at 20.1%, according to CLSA Ltd.

Jubilant Foodworks Ltd. Q4 FY23 highlights (Year-on-Year)

  • Revenue up 8% to Rs 1,269.85 crore.

  • Operating profit declined 14% to Rs 249.11 crore.

  • The margin stood at 19.6% against 24.6% on higher expenses.

  • Total expenses rose 16% to Rs 1,205 crore during the quarter.

The demand was muted on account of inflation having an impact on consumer sentiment and high competition in the pizza segment, CLSA said. Due to its strengthened value offering, Jubilant is looking to increase dine-in sales by investing in its stores, the brokerage said.

Jubilant FoodWorks saw its Ebitda margins decline due to higher marketing expenses and the impact of a one-off for employee spending, according to CLSA.

The outlook is more stable at the end of Q4 FY23 compared to Q3 FY23, according to the management. Q1 FY24 is expected to be good from a demand perspective because of the Indian Premier League season and school holidays.

However, the overall discretionary demand environment still remains uncertain, with cheese prices staying elevated and soft consumer demand.

Popeye’s may be a growth lever, as its response has been promising in southern states, the company's management said.

Other Highlights:

  • The company has appointed Sameer Batra as the chief business officer of Domino’s India. 

  • It is likely to open 200–225 new Domino’s stores and 30-35 new Popeye's stores in FY24.

  • Consumer engagement is on the rise, with monthly active users at 1.1 crore.

  • The company launched a 20-minute guaranteed delivery service in Bengaluru for the first time in India and among the global Domino’s network. Same-store sales grew by double digits in Bengaluru after that. The company plans to roll it out to the top seven cities eventually, one at a time, without compromising on safety or infrastructure. 

  • The company took an impairment charge of Rs 20 crore in the quarter ended March on account of the continued challenging economic environment in Sri Lanka, with sustained inflation, depreciation of the currency, and depletion of forex reserves.

Here is what brokerages have to say about the company


  • Maintains 'sell' rating, but raises the target price to Rs 460 from Rs 400.

  • The brokerage said most of the de-rating has happened, with the last leg of the downgrade playing out now.

  • Expects the stock to undergo some time correction as near-term demand remains weak.

Morgan Stanley & Co.

  • Has an 'overweight' rating, with a target price of Rs 560.

  • Estimates weak growth for Domino's but better than pizza peers, as revenues of Devyani International Ltd.'s Pizza Hut fell 8% quarter-on-quarter.

  • Estimates weak same-store sales growth. Competition from food aggregators, a rise in cost inflation, and changes in consumer preferences are the key risks to watch.

Shares of Jubilant FoodWorks were trading 0.71% lower at Rs 477.7 apiece, compared to a 0.42% gain in the benchmark Nifty 50 as of 11:55 a.m. on Thursday.