Citi has repeated its “buy” rating on Jubilant Foodworks, the franchise for Domino’s Pizza in India, with a target price of Rs 619 per share, up 45% from April 11 closing price, citing a solid potential for medium-term earnings growth.

As per Citi’s research, Jubilant Foodworks is well-positioned to benefit from market tailwinds, store expansion, and digital investments. The recent pullback in the stock price shows a buying opportunity for long-term investors.

At 9.20 am, the stock was trading at Rs 431.30 on the NSE, up 2% from the preceding day. The stock fell beyond 30% in the earlier six months as inflation ate into consumers’ optional spending, hitting the company’s income.

Same-store sales growth was muted over the past few quarters, and the company’s combined net profit fell sharply by 40% in Q3FY23.    

Jubilant Foodworks’ operating margins contracted amid high wheat and milk prices.

However, Analysts believed in best-in-class unit economics, consumer and store base, and delivery expertise with quick service restaurant (QSR) peers. The Street believes other QSR chains were slow growth and rich in valuations.

“Jubilant Foodworks moves its investments in dine-in along with strengthening its backend by building new commissaries in Bengaluru and Mumbai over the next 12-15 months,” HDFC Securities’ analysts mentioned.

They model Domino’s growth of 250 stores each for FY24/25/26 and have a target of Rs 475 on the stock.