Jubilant Foodworks, a key player in the Leisure Services sector, currently trades at ₹594.10, slightly below its previous close of ₹599.95. The stock’s 52-week range spans from ₹565.15 to ₹796.75, reflecting notable volatility over the past year. Despite a weekly return of 1.59%, outperforming the Sensex’s 0.85% in the same period, the stock has lagged behind broader market benchmarks over longer horizons. Year-to-date, Jubilant Foodworks shows a return of -17.15%, contrasting with the Sensex’s 9.02% gain. Over one year, the stock’s return stands at -3.05%, while the Sensex advanced by 9.81%. Even over three and five years, Jubilant Foodworks’ returns of 7.84% and 18.33% respectively fall short of the Sensex’s 38.15% and 95.38% gains.
These figures highlight a consistent underperformance relative to the benchmark indices, raising questions about the stock’s comparative appeal despite its sector prominence. Jubilant Foodworks holds a market capitalisation of approximately ₹39,201 crore, making it the second largest company in its sector after Page Industries. It accounts for 23.02% of the sector’s market cap and contributes 21.25% of the industry’s annual sales, which total ₹8,854.95 crore.
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Quality Assessment
Jubilant Foodworks exhibits strong management efficiency, reflected in a Return on Capital Employed (ROCE) of 12.7% and a Return on Equity (ROE) of 14.75% in the latest reported period. These figures indicate effective utilisation of capital and shareholder funds. The company’s operating profit margin and net sales have shown healthy growth, with net sales expanding at an annual rate of 22.69% and operating profit increasing by 24.16%. Additionally, the operating profit to interest ratio for the quarter reached 4.50 times, signalling robust coverage of interest obligations. Operating cash flow for the year stood at ₹1,205.44 crore, underscoring strong cash generation capabilities. Dividend per share for the year was ₹1.20, reflecting a modest return to shareholders.
Valuation Considerations
From a valuation standpoint, Jubilant Foodworks is positioned at the higher end of the spectrum within its sector. The company’s price-to-earnings (PE) ratio is 122.58, significantly above typical market averages and peer comparisons. Its price-to-book value stands at 18.09, while enterprise value to EBIT and EBITDA ratios are 52.34 and 25.57 respectively. The PEG ratio, which relates valuation to earnings growth, is 3.81, suggesting that the stock’s price incorporates expectations of substantial growth. Dividend yield remains low at 0.20%, which may be less attractive to income-focused investors. Despite these elevated valuation metrics, the stock is trading at a discount relative to some peers’ historical averages, indicating nuanced market positioning.
Financial Trend Analysis
Jubilant Foodworks’ recent quarterly financial performance has been positive, with profits rising by 32.2% over the past year. However, the stock’s returns have not mirrored this profitability trend, as evidenced by its negative returns over the one-year and year-to-date periods. This divergence suggests that market participants may be weighing other factors beyond earnings growth, such as valuation concerns or sector dynamics. Institutional investors hold a significant 53.35% stake in the company, which may reflect confidence in the company’s fundamentals despite short-term price fluctuations.
Technical Indicators
The technical outlook for Jubilant Foodworks has shifted towards a more cautious stance. Weekly and monthly Moving Average Convergence Divergence (MACD) indicators signal bearish and mildly bearish trends respectively. Bollinger Bands on both weekly and monthly charts also indicate bearish momentum. Daily moving averages align with this negative technical sentiment. The Know Sure Thing (KST) indicator shows bearish tendencies on a weekly basis and mild bearishness monthly. Other indicators such as the Relative Strength Index (RSI) and On-Balance Volume (OBV) currently do not provide clear signals. The Dow Theory reflects no definitive trend weekly but mild bearishness monthly. Collectively, these technical signals suggest a cautious approach to the stock’s near-term price movement.
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In summary, Jubilant Foodworks presents a complex investment profile. Its operational metrics and long-term growth rates remain encouraging, supported by strong management efficiency and cash flow generation. However, elevated valuation multiples and a cautious technical outlook temper enthusiasm. The stock’s underperformance relative to benchmark indices over multiple timeframes further complicates the assessment.
Investors analysing Jubilant Foodworks should consider these multifaceted factors carefully. While the company’s market position and financial health are notable, the current market environment and valuation levels warrant a measured approach. Monitoring ongoing financial results and technical developments will be essential to gauge future performance trajectories.
Overall, the recent revision in the company’s evaluation reflects a balanced view that incorporates both strengths and challenges, providing a comprehensive perspective for market participants.
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