India’s largest pizza chain posted its strongest margin quarter in recent memory, yet the stock remains caught between those who see a turnaround and those who think the valuation still asks too much
In a consumer economy where quick-service restaurant chains have spent the better part of two years complaining about weak demand, Jubilant Foodworks just delivered a quarter that suggests the Domino’s playbook is working again. Revenue grew 12% year-on-year. EBITDA margins expanded over 100 basis points. Profit after tax surged 32%. And the company did all of this while keeping its value proposition sharp enough to fend off the aggregator onslaught that has upended India’s food delivery landscape.
The Q3FY26 numbers are, by most measures, a clean beat. Standalone revenue came in at Rs 18 billion, in line with expectations. But EBITDA of Rs 3.7 billion, growing 18% with margins at 20.5%, caught analysts off guard — comfortably ahead of estimates. Recurring PAT grew 32.4% year-on-year.
The real debate, however, is not about the quarter. It is about what investors should pay for a business that is executing well but growing at a pace that no longer justifies a premium multiple.
The LFL Puzzle
Like-for-like growth — the metric that matters most in QSR — came in at 5%. In isolation, that number sounds modest. In context, it is anything but.
Antique Stock Broking, which maintains a Buy with a revised target of Rs 700, frames it well: “LFL growth of 5% is commendable on a high base of 12.5% while most other peers have reported muted same-store sales growth.” The brokerage sees Jubilant’s product innovation as the key differentiator, noting that “recent launches witnessed encouraging feedback” and that new products like sourdough and cheese lava pull-apart are “gross margin accretive.”
Nirmal Bang, which holds a more cautious view with a Hold rating and a target of Rs 620, acknowledges the relative outperformance but warns that “SSSG growth while better than peers is tapering off over a high base, which will be a challenge for two more quarters.” The implication is clear — the easy comparisons are behind, and maintaining even mid-single-digit LFL growth will get harder from here.
Order growth of 9.6% and delivery channel revenue growth of 16% suggest Jubilant is winning the volume game. The delivery channel now accounts for nearly 75% of revenue. To protect its turf against Zomato and Swiggy, the company has matched minimum order values at Rs 99 in select areas while simultaneously investing in driving traffic to its own app. Management is confident of squeezing an additional 100 basis points of margin from app monetisation in the medium term — a claim that, if delivered, would be a meaningful earnings lever.
Margins: The Real Surprise
The standout feature of the quarter was profitability. Gross margins held steady at 74.9%, contracting a negligible 16 basis points despite inflation in oil, dairy, and flour — a testament to calibrated pricing and the margin-accretive product mix.
Pre-Ind AS EBITDA margins expanded 90 basis points to 13.3%, while reported EBITDA margins came in at 20.5%, up 109 basis points year-on-year. Nirmal Bang notes that the beat was driven by “lower other expenses, down by 50 basis points year-on-year, and lower employee costs, down by 80 basis points,” and adds that “profitability is improving because of more premium products contribution in FY26 compared with FY25.”
Antique Stock Broking attributes the improvement to “operating leverage and better store productivity,” and builds in a pre-Ind AS EBITDA CAGR of 23% over FY25-28 — an aggressive but not unreasonable assumption if the current trajectory holds.
Beyond Pizza: Popeyes and the International Story
The Popeyes experiment is quietly becoming one of the more interesting subplots. The fried chicken chain delivered “high double-digit LFL growth for the second consecutive quarter,” according to Antique Stock Broking. With 73 stores across north, south, and west India, the brand is still small. But management’s stated approach of achieving “industry-leading average daily sales and similar gross margins before accelerating network addition” suggests discipline over speed — a welcome contrast to the growth-at-all-costs playbook that burned many QSR operators in recent years.
Internationally, the picture is encouraging. Turkey delivered 6.3% LFL growth with revenue of Rs 5.8 billion, growing 15% year-on-year. Antique Stock Broking highlights a significant milestone: “100% of the interest obligations in Turkey are now being paid off by its internal cash flows.” Sri Lanka and Bangladesh, while still small, posted revenue growth of 66% and 27% respectively.
The Network Push
Jubilant added 75 net new Domino’s stores in the quarter, taking the India count to 2,396 across 511 cities. The nine-month tally stands at 217 stores. Management has outlined a plan to open 1,000 stores over three years, backed by annual capex of Rs 7-8 billion. Nirmal Bang provides the broader network picture: 783 stores in Turkey, 93 across Sri Lanka and Bangladesh, and 190 Coffy outlets, with 38 additions in the past twelve months.
Antique Stock Broking has raised its target to Rs 700 from Rs 620, based on a sum-of-the-parts valuation on FY28 estimates. The brokerage sees “topline momentum sustained by strong innovative products with great value, management’s focus on driving growth through an aggressive price-value equation, and the gradually improving macroeconomic situation.” Revenue and pre-Ind AS EBITDA CAGRs of 14% and 23% over FY25-28 underpin the thesis, with near-term profitability expected to improve further from GST reduction and operating leverage.
Nirmal Bang is unconvinced that the growth justifies the price tag. “While the stock has corrected approximately 24% from the peak, valuations at around 26x consolidated pre-Ind AS FY27 EBITDA are still not cheap enough to warrant an upgrade, especially given the slower growth in the India business ahead,” the brokerage writes, maintaining its Hold at Rs 620.
