Singapore: For equity investors seeking early signs of any revival among consumers, here is a stock to watch: the distributor of Domino's Pizza and Dunkin' Donuts in the country.
Jubilant Foodworks, the nation's biggest fast food stock and a bellwether for discretionary consumption, has seen its shares shed almost a quarter of their value from a record high about a year ago as Indians cut back on spending. But some analysts are seeing light at the end of the tunnel.
Eating out is one of the first expenditures that consumers reduce when the economy slows, but restaurants are also the first to benefit when sentiment turns around. The Indian government has taken steps to bolster its fragile economy in the past month, and some economists expect the central bank to make deeper interest-rate cuts.
"The consumption trend seems to have bottomed out, and the government has started announcing some stimulus measures," said Manoj Gori, an Analyst at Equirus Securities who advises investors to buy Jubilant's stock. "Once consumers get their confidence back, eating out will be the first point of spending," said Gori, who estimates the shares can return about 15 per cent within 12 months.
Adding to the potential tailwinds, economists including those at Goldman Sachs are predicting deeper interest-rate cuts by central bank to revive the pace of expansion after 110 basis points of easing already this year. Analysts who track Jubilant at Edelweiss Financial Services predict Jubilant's profits will increase by 15 per cent in fiscal year 2020 as consumer spending revives and the company expands its business.