Jubilant Foodworks shares have come under sharp selling pressure after the company's March-quarter profit lagged analyst expectations. Jubilant Foodworks runs the Domino's Pizza chain in the country.
Shares in Jubilant Foodworks, which fell 7.4 per cent after earnings announcement on Thursday, extended their decline in early trade on Friday. The stock slipped nearly 3 per cent to Rs 992 as of 09.20 a.m.
Results disappoint:
Jubilant Food's net profit for the March quarter rose 12 per cent to Rs 32.7 crore, lagging estimates. Same Store Sales growth was the lowest since 2009 at 7.7 per cent.
EBITDA margins, a key measure of profitability rose to 16.7 per cent against 18.5 per cent in the same quarter last year. The company has guided for 16.5 per cent margins for the next quarter.
Brokerages cut earnings estimates:
Domestic brokerages Kotak and Religare have cut their earnings per share estimates for Jubilant by 24 per cent and 13 per cent to Rs 25 and Rs 24.7 respectively. Global investment bank Credit Suisse has cut Jubilant Food's EPS by 10 per cent to Rs 25.4, while Goldman Sachs has cut its EPS estimate by 13 per cent to Rs 26.61.
Trading strategy:
Most analysts NDTV spoke to have a bearish outlook on Jubilant Food shares:
Sarvendra Srivastava says 1,080-1,100 is a strong resistance for Jubilant and downsides of 7-8 per cent will open once the stock breaks below the 1,000 mark.
Market analyst Rajat Bose says if Jubilant Food breaks below 983, levels of 955 are possible. The stock has shown a bearish formation and even 955 is unlikely to hold going forward.
Independent analyst Sanjiv Bhasin says Jubilant Food may slip to Rs 800 over the next two quarters.
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