India’s restaurant sector is thriving, valued at over Rs 5.69 trillion in FY24 and projected to reach Rs 7.76 trillion by FY28, growing at a CAGR of 8.1 percent. The sector employs 8.5 million people, expected to rise to 10.3 million by 2028, making it a significant economic contributor and job creator.
Price movement
With a market capitalization of Rs 41,415.18 crore, the shares of Jubilant FoodWorks Ltd were trading at Rs 627.65 per share, decreasing around 6.37 percent as compared to the previous closing price of Rs 670.50 apiece.
Brokerage Recommendation
Emkay Global, one of the well-known brokerages in India, trimmed a ‘Buy’ call on the QSR stock from a target price of Rs 800 apiece to Rs 750 per share, indicating a potential upside of 19 percent from Friday’s closing price of Rs 628.10 per share.
Recommendation Rational
According to brokerage, Jubilant Foodworks aims for 3,000+ Domino’s India stores, four new commissaries by FY28E, and 1,000+ Domino’s Turkey outlets, while pushing Coffy to third in Turkey. It focuses on food innovations and infrastructure upgrades. However, guidance for just a 200 bps PAT margin expansion over three years was disappointing.
The brokerage noted that despite anticipated debt reduction at the consolidated level, the increase should have been larger, indicating limited leverage from new interventions. A stronger scale-up in standalone margins, crucial to its Sum-of-the-Parts (SotP) valuation, could drive a more meaningful impact on overall performance.
Strategic Framework
The company’s strategy delivers results ahead of expectations through two pillars: Strengthening Domino’s with a seven-region structure, a brand revamp, 20-minute delivery, and product innovation; and boosting emerging brands, with COFFY targeting Turkey’s top five cafés and Popeyes optimizing expansion and unit economics.
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Operational Highlights
Domino’s India achieved record sales with 33.8 percent order growth, 55.4 percent new customer acquisition, and 24.7 percent delivery LFL growth. Innovations like Cheese Volcano and Chicken Feast boosted demand. Digital engagement rose to 14M users, while 60 new stores expanded presence into 19 new cities.
Margin Insights
The company’s gross margin declined 160 bps YoY to 75.1 percent due to higher food costs and promotions. Standalone EBITDA rose 10.6 percent YoY to Rs 3.1 billion, with a 19.4 percent margin. Pre-Ind-AS-116 EBITDA margin improved, reflecting sustained operational leverage.
Future Outlook
Management remains optimistic about sustaining growth in Q4 FY25, driven by technology, delivery, and product innovation. A 100-basis point gross margin improvement is expected in two to three quarters. Despite short-term margin pressures, investments in customer acquisition and market share expansion will continue.
Company snapshot
Jubilant FoodWorks Limited is engaged in retail sales of food through international and homegrown brands addressing different food market segments. International brands include Domino’s Pizza, Dunkin’ Donuts, and Popeyes.
Written by Abhishek Singh
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