Domino’s Franchisee Stages a Breakout! Rises Above 5.5-Month High!

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Taking support from the broader markets, Jubilant Foodworks (NS: JUBI ), Domino’s Pizza franchisee for Indian operations is catching investors’ attention in today’s session. The share price of Jubilant Foodworks surged by 3.76% to INR 606.9, by 11:23 AM IST, which is the highest level in over 5.5 months. 

The company is part of Jubilant Bhartia Group and is India’s largest food service company, with a market capitalization of INR 38,472 crores. Apart from the world-famous Domino’s Pizza brand, the company also has franchise rights for Dunkin Donuts, Hong’s Kitchen, Ekdum!, Popeyes and ChefBoss. In the last financial year, it was amongst the most profitable companies in its segment with a reported net profit of INR 437.53 crores, compared to INR 156.33 crores for Devyani International Ltd (NS: DEVY ) which runs KFC, Pizza Hut, Costa, etc. outlets in the country. Even Mcdonald's master franchise rights holder Westlife Development Ltd (NS: WEST ) and Burger King franchisee Restaurant Brands Asia Ltd (NS: RESR ) posted a net loss of INR 1.67 crores and INR 195.92 crores in FY22, respectively.   

Image Description: Daily chart of Jubilant Foodworks with volume bars at the bottom

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Jubilant Foodworks has always remained investors’ favorite in this sector, despite new entrants in the last couple of years. Today the stock delivered a clear breakout on the daily chart, as it surged to the highest level since 23 February 2022, surpassing the immediate resistance of INR 600. Although, there hasn’t been a volume expansion seen with the price gain, which makes the reliability of the breakout a bit skeptical. However, the price chart is completely in the favor of the bulls.

Currently, there is decent support around INR 545 which is the recent swing low. As long as the stock stays above this trough, the potential of an impending up move persists. On the chart, the next hurdle where the stock might face some resistance on account of increased selling pressure is around INR 675 - INR 680, which depicts a decent upside potential of around 11% - 13% from the CMP. 

The option chain data shows call unwinding from 550CE to 590 CE from the August 2022 expiry, as bears are making an exit from the short options position. Also, the highest OI was present at 600 CE, at over 2,072 contracts which would likely fall as the strike price becomes ITM today. On the put side, the highest OI has been added at 600 PE, at around 275 contracts, which again is painting a bullish picture for the stock. For the current expiry, the second-highest OI at 650 CE, with 1,037 contracts would act as a resistance.

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