Investor fad for the Indian consumption story is captured in Jubilant Foodworks, a Domino’s pizzas franchisee, being valued at almost the same as the US owner of the brand with ten times the revenues, raises concerns of irrational exuberance over growth.
Last week the stock market value of Jubilant touched a peak of $1.4 billion or Rs 6,190 crores, making it the most expensive popular consumer goods stocks at more than 50 times its future earnings. This compares with a market value of $1.5 billion for the New York Stock Exchange listed Domino’s Pizza Inc. that owns the eponymous brand. Jubilant’s market value was $890 million on December 31, 2010.
“Jubilant’s current valuations are exorbitant,” said A. K. Prabhakar, senior vice president-equity research, Anand Rathi Financial Services. “Even if the company adds two or three more brands, these valuations will still be expensive.”