Jubilant FoodWorks Falls 5% After Q2, but Brokerages Hold Firm

Jubilant FoodWorks’ Earnings Offer Reassurance, but Investors Still Weigh the Costs

Revenue growth and better gross margins support the outlook, while the share-price decline highlights lingering questions about the pace of recovery.

Jubilant FoodWorks shares fell as much as 5.16% to ₹427.70 after its September-quarter results, even as brokerages largely maintained their positive ratings. Revenue grew 11.8% year on year, while profit from continuing operations was broadly unchanged; improved gross margins and store additions offer support, but input-cost pressures remain in focus.

A market decline despite broadly expected results

Jubilant FoodWorks’ shares extended their decline for a second straight session after the company reported its Q2 FY27 results. The stock fell as much as 5.16% to ₹427.70 on the NSE on Monday, following a 1% decline during Sunday’s Muhurat trading session. The move came despite brokerages describing the results as broadly in line with expectations and largely retaining their estimates.

The quarter presented a mixed picture. Consolidated revenue rose 11.8% year on year to ₹2,607.88 crore from ₹2,346.8 crore, while profit from continuing operations edged up to ₹113.9 crore from ₹113.3 crore. That gap between revenue growth and nearly flat profit keeps the focus on how effectively the company can convert sales into earnings as operating costs rise.

Efficiency and pricing helped protect gross margins

A notable positive was the 110-basis-point year-on-year expansion in gross margin to 75.5%. Pricing, a better product mix, supply-chain efficiencies and lower wastage supported the improvement, despite inflation in LPG, labour, cheese, oil and chicken. The company also used calibrated price increases of 140–200 basis points and productivity initiatives to limit the effect of those cost pressures.

The margin outcome matters because sales growth alone does not assure stronger profitability when key inputs are becoming more expensive. The quarter suggests operational measures are helping, but it does not remove the need to track whether those gains can continue alongside expansion. Gross-margin improvement should also be distinguished from a full recovery in operating profitability: MOFSL’s estimates put pre-Ind AS EBITDA margin at 12.5–13.5% over its forecast period.

Store additions reinforce the growth strategy

Jubilant added 99 net stores in India during the quarter, taking its total to 2,728. Domino’s accounted for 88 openings, while Popeyes added 11 stores to reach 99. Hong’s Kitchen did not add a store and remained at 28 outlets. Management plans to add 300 stores annually, with slightly higher expansion for Popeyes.

Expansion can widen the company’s reach and create room for future sales, while Popeyes’ planned emphasis gives investors another growth avenue to monitor. But the store count is only one part of the assessment: the company’s ability to build sales at existing outlets and maintain margins will also shape how expansion translates into profits. MOFSL cited potential like-for-like growth of 5–7% and strong Popeyes momentum in its positive medium-term view.

Brokerage confidence leaves execution in focus

MOFSL reiterated its Buy rating and ₹625 target price, citing margin recovery efforts, international performance and growth potential. It models a 13% standalone revenue compound annual growth rate over FY26–28E. Nuvama also maintained a Buy rating, although it trimmed its FY27 and FY28 revenue and EBITDA estimates and reduced its target price to ₹614 from ₹646.

The differing target-price revisions underline that positive ratings do not eliminate execution risks. Investors will need to assess whether productivity and supply-chain gains can keep offsetting input inflation, whether store additions support profitable growth, and whether sales at existing outlets meet expectations. Brokerage forecasts are views, not outcomes, and the share-price decline shows that a broadly in-line quarter may not settle every concern.

Key Highlights

• Consolidated Q2 revenue increased 11.8% year on year to ₹2,607.88 crore.
• Profit from continuing operations was ₹113.9 crore, compared with ₹113.3 crore a year earlier.
• Gross margin rose 110 basis points to 75.5%, aided by pricing and operating efficiencies.
• India store count reached 2,728 after 99 net additions; Popeyes expanded to 99 outlets.
• MOFSL and Nuvama retained Buy ratings, while Nuvama lowered its target price and estimates.

Investor Note: The quarter offers evidence of revenue growth and margin discipline, but investors should weigh these gains against nearly flat profit, input-cost inflation and the execution demands of rapid store expansion. Brokerage targets are estimates, not assurances of future returns.