If there is one Stock which has consistently gone from strength to strength, almost defying all logic, it is JUBILANT FOODWORKS. With a CMP of 947 (52 wk high 972, 52 wk low 300 on BSE, 465 on NSE) it curently trades at a PE(TTM) of 76 approx.
If we examine the Price Movement of the Stock on TECHNICALS even though the data available is limited, we see that the 200 DMA has NEVER been violated either intraday or closing basis in the Scrips available lifetime since Feb2010. Current 200 DMA is at 683. Now if we see the 1 yr Charts we observe that even the 150 DMA has been violated only once ie in February 2011 where it traded about 5-10% below 150 DMA for a period of about 3 weeks. Other than that, the 150 DMA too has not been decisively violated in the last one year, which is indeed phenomenal. Even if we look at the 200 DMA over a 6 month period we see that the closest the Scrip Price came to the 200 DMA was abot 8% above it on an intraday basis, at Rs 540, on 30/3/2011.
FUNDAMENTALLY speaking the Scrip has everything going for it, consistent great results, Q1 FY2011-12 Net Profit up 52% yoy, Q4 FY2010-11 Net Profit up 86% yoy; consistent Margin growth from 12% to almost 19%; great growth visibility in terms of its own organic growth as well as upcoming Dunkin Donuts foray; great pricing power as well as Brand pull of established Brands etc etc . In short, the works!!! However it is pretty expensive at this stage at PE TTM 76 and definitely has a lot of trading froth which makes the long term investors task that much tougher.Even assuming a 40% CAGR over the next couple of years the Scrip is trading at about PE 46 2011-12 Expected Earnings basis, which is definitely expensive.
Taking a techno-fundamental view, I think the, optimum entry price for the Scrip is about Rs 680 which roughly corresponds to a PE (Current years estimated earnings) of about 33. In simple terms, if the Scrip were to go down to 680 then it could be bought in truckloads at that price!!!! However since we may NEVER get this entry price the next best thing would be to start buying 15% higher ie around 780 levels and average out downwards, on bad days.
Thus to encapsulate, Fair Price for the Scrip is about Rs 680 and the safe buying zone commences at around 780 levels for long term investors, in my opinion.
If we examine the Price Movement of the Stock on TECHNICALS even though the data available is limited, we see that the 200 DMA has NEVER been violated either intraday or closing basis in the Scrips available lifetime since Feb2010. Current 200 DMA is at 683. Now if we see the 1 yr Charts we observe that even the 150 DMA has been violated only once ie in February 2011 where it traded about 5-10% below 150 DMA for a period of about 3 weeks. Other than that, the 150 DMA too has not been decisively violated in the last one year, which is indeed phenomenal. Even if we look at the 200 DMA over a 6 month period we see that the closest the Scrip Price came to the 200 DMA was abot 8% above it on an intraday basis, at Rs 540, on 30/3/2011.
FUNDAMENTALLY speaking the Scrip has everything going for it, consistent great results, Q1 FY2011-12 Net Profit up 52% yoy, Q4 FY2010-11 Net Profit up 86% yoy; consistent Margin growth from 12% to almost 19%; great growth visibility in terms of its own organic growth as well as upcoming Dunkin Donuts foray; great pricing power as well as Brand pull of established Brands etc etc . In short, the works!!! However it is pretty expensive at this stage at PE TTM 76 and definitely has a lot of trading froth which makes the long term investors task that much tougher.Even assuming a 40% CAGR over the next couple of years the Scrip is trading at about PE 46 2011-12 Expected Earnings basis, which is definitely expensive.
Taking a techno-fundamental view, I think the, optimum entry price for the Scrip is about Rs 680 which roughly corresponds to a PE (Current years estimated earnings) of about 33. In simple terms, if the Scrip were to go down to 680 then it could be bought in truckloads at that price!!!! However since we may NEVER get this entry price the next best thing would be to start buying 15% higher ie around 780 levels and average out downwards, on bad days.
Thus to encapsulate, Fair Price for the Scrip is about Rs 680 and the safe buying zone commences at around 780 levels for long term investors, in my opinion.
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