New Delhi: Jubilant FoodWorks saw a rise in its share price by 2.26 percent to Rs 442.05 in morning trade on April 18 after Coca-Cola India acquired a 15 percent stake in Hashtag Loyalty, an associate of the leading QSR chain operator. Hashtag Loyalty’s food ordering platform Thrive has a partnership with over 12,000 restaurants across India, and this partnership with Coca-Cola is expected to increase consumer engagement for the beverage maker.
The regulatory filing on April 17 stated that Hashtag Loyalty raised capital at a pre-money valuation of Rs 104.68 crore, and other investors backing Hashtag include thinQbate and Ahimsa Capital. After the transaction, Jubilant FoodWork’s stake in Hashtag has reduced to 29.75 percent from 35 percent.
Although Jubilant FoodWorks’ stock has fallen by around 12 percent on a year-to-date basis, compared to a 3 percent drop for the Nifty, Citi has reiterated its ‘buy’ rating on Jubilant FoodWorks and set a target price of Rs 619 a share, indicating a 40 percent upside from current levels.
According to reports, Jubilant Foodworks is well-positioned to benefit from market tailwinds, faster store expansion, and digital investments. ICICI Securities has also maintained its ‘buy’ rating on Jubilant FoodWorks, citing the expansion of its Popeyes chain of stores, value-for-money offerings, and delivery.
Despite the positive outlook from analysts, there are still potential risks to Jubilant FoodWorks’ business. Key downside risks include raw material costs turning inflationary and an increase in competitive intensity, as mentioned in ICICI Securities’ recent note.
In conclusion, Coca-Cola India’s acquisition of a 15 percent stake in Hashtag Loyalty is expected to increase consumer engagement for the beverage maker, and analysts have reiterated their ‘buy’ rating on Jubilant FoodWorks due to its strong positioning in the market and digital investments. However, there are still potential risks to the business that investors should keep in mind.
