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On Friday, BofA Securities adjusted its price target for Jubilant Foodworks Ltd (NSE:JUBI:IN), reducing it to INR685 from the previous INR725 while maintaining a Neutral rating on the stock. The revision follows the company's third-quarter financial year 2025 earnings, which did not meet expectations despite robust revenue growth highlighted last month.
Jubilant Foodworks, which operates Domino's Pizza (NYSE:DPZ) in India, reported an 18% year-over-year increase in revenue, driven by a 12.5% growth in like-for-like (LFL) sales and approximately 25% LFL growth in deliveries. This resulted in a mid-teens percentage growth in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) before the application of IndAS 116 accounting standards for the quarter.
The company experienced positive operating leverage on overheads; however, challenges such as softer gross margins and higher delivery costs impacted earnings. Notably, new product launches, including more cheese pizza variants and a chicken launch, along with higher discounts on aggregator platforms due to slow industry demand and increased competitive intensity, presented margin headwinds.
Jubilant Foodworks aims to mitigate these challenges with cost-saving initiatives projected to recoup approximately 100 basis points over the next 2-3 quarters. These efforts are in response to the margin pressures from delivery fee waivers and other factors affecting the company's profitability.
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