Recent Q2 profits of Jubilant FoodWorks Ltd (JFL) have not only raised eyebrows among the investors and industry stakeholders but also owes much of their credit to the exceptional performance of Domino brand in India. Unpacking the meaning of the results in this piece, why Domino’s necessitated the outperformance and main lessons to investors in the fast-food restaurant (QSR) business.

Strong numbers in Q2

Jubilant FoodWorks registered a net profit of about 193.6 crore on about 2 and 3 respectively on revenue of about 2,340 crore that is almost three times higher compared to Q1 which recorded 66.4 crore. 

The operating earnings (EBITDA) had increased approximately 19.5 per cent and the margins remained constant within the 20 percentage margin. 

The most notable thing is that the Domino business in Jubilant FoodWorks Ltd was the catalyst to growth. India Domino registered growth of like-for-like sales of the order of 9.1 and delivery channel revenue increased by more than 20 percent. 

Why Domino’s matters for Jubilant FoodWorks Ltd

The most successful brand of JFL is Domino and its performance makes the majority of group indicators. Some points to note:

• Domino’s delivery channel grew by approximately 21.6 per cent annually with an increase in order volume of +23.7%. 
• The growth of the store network: it expanded its presence in India by opening 81 new Domino Pizza stores in the quarter, expanding their cover. 
• Dine-in is vulnerable in a market, and Domino has a good structural advantage given its good delivery and digital traction.

To investors, that is to say Domino’s is not only a legacy brand, but also a major growth generator in JFL, and the performance in the quarter is indicative of that.

What this means for investors

1. Expansion supported by performance: The impressive performance of Domino provides an assurance of the JFL operating model expansion strategy – the store expansion is matched by the digital/delivery strength, as opposed to mere new store openings.

2. Stable margins with possible future growth: Although the margins did not experience significant growth in this quarter, the company commentary might provide a margin growth path. The rising store-productively, increased delivery mix and cost efficiencies of Dominos are likely to assist.

3. Relative performance: Dominos results at Jubilant FoodWorks Ltd are better than those of many other QSR chains that continue to struggle with low demand or with low margins. 

4. Investor spirit and valuation catalyst: The earnings surpass, and the strength of Domino ignited a rise in share-price in JFL, which highlights the manner in which investors are giving Domino its due. 

5. Monitoring risks: Despite Dominos, the macro headwinds still exist, including the increase in the cost of raw materials (including cheese and sauces) and rent increases and the ongoing dine-in recovery. To the investors, these should be tracked together with the upside.

Medium Term Strategic Focus

To carry on the momentum JFL had this quarter, and so that Dominos can keep the delivery, the following will play a pertinent part:

• Continue to achieve a same-store sales growth (SSSG) of double digits (primarily through digital/delivery) channels at Domino.
• Grow store net work: expansion is not to negate unit economics.
• Enhance margin through realizing cost efficiencies, store scale and lean operations.
• Expand ancillary brands and foreign markets, but without losing concentration over Dominos India.
• Avoid inflation and input pressure: The Domino input-heavy delivery system is an advantage, although the issue of input inflation is a risk factor.

Final thoughts

The outcome of the headline – almost three times increase in the profit of JFL during Q2 is notable. The part to investors though is the way Domino is being run which underlies that result. As Domino continues to grow, enhancing productivity and utilizing digital/delivery channels, JFL should be well placed in the Indian QSR market.

That being said, the valuations should take into consideration risks: cost inflation, competitive intensity, and macro demand softness. However within the boundaries of the current quarter, Domino has performed and that provides investors with a better set of lenses within which they can analyze the potential of JFL.

Whether JFL (and therefore their Domino business) is under consideration to invest, this quarter is a valuable inflection point: high growth with well-established execution instead of high-line growth. The Domino model in India may also be used as a reference point to those in the industry on how QSR chains should focus on pivoting to make their way in the industry, namely by doing more delivery, more digital, more productivity in the store.

Next Trend Outlook (Technical Interpretation)

Based on chart structure (not financial advice), here are the likely next movements investors will watch:

Bullish Indicators Emerging

• Price has broken above short-term resistance near ₹600
  
• 20-day moving average is curling upward
  
• First higher low is forming after months of decline
  

If price sustains above ₹620, the next bullish targets may be:

• ₹640 (first resistance)
  
• ₹660–₹670 (major resistance zone)
  

Bearish Risk Zone

If the price falls back below ₹595, it would signal:

• Breakout failure
  
• Return to the bearish trend channel
  

Downside levels to watch:

• ₹580
  
• ₹565–₹570 support zone
  

Trend Summary

• Short-term: Bullish breakout attempt
  
• Medium-term: Trend reversal possible if it crosses ₹640+
  
• Long-term: Needs a close above 200-day MA for structural trend reversal

Disclaimer

This article is for informational and educational purposes only. It is not investment advice, financial advice, or a recommendation to buy or sell any securities. Stock market investments are subject to market risks. Readers should conduct their own research or consult a qualified financial advisor before making investment decisions.