Among online delivery platforms, shares of Eternal (Zomato) and Swiggy each ended 1% lower after falling 5%.
InstitutionsThe battle to stop supply disruptions has affected kitchen operations in some areas, although the impact on large QSR chains has so far been limited.
Westlife Food World, the operator of McDonald’s restaurants in western and southern India, fell about 3%, Jubilant Foodworks, the Domino’s brand franchisee, fell about 2.4% and Specialty Restaurants, which owns several restaurant chains, ended 0.2% lower.
“The decline in food supplies and QSR stocks seems to be a significant reaction to concerns over a possible shortage of commercial LPG cylinders and the potential disruption it may cause to restaurant operations,” said Nerli Bhansali, equity fund manager at Simcoe Mutual Fund.
According to Sunny Aggarwal, head of fundamental research at SBI Securities, feedback from restaurant owners suggests that the LPG supply disruption will affect kitchen operations at some locations, though the impact on large listed QSR chains is likely to be limited.
“Many restaurant owners have pointed to the disruption in LPG supply and the potential impact on smooth operations,” said Agarwal, adding that regular QSR chains are relatively less dependent on commercial LPG cylinders as they mostly rely on electric ovens and other cooking equipment.
Technical indicators are pointing to a reversal in Eternal Ltd and Jubilant FoodWorks. “Technically, in the short-term time frame, Eternal is making a low high and is trading comfortably below the short-term average, which is broadly negative,” said Amul Athaval, vice president of technical research at Kotak Securities.
Shares in Eternal Ltd have corrected more than 10% so far this month.
If the stock succeeds in trading above the 210-215 range, the pullback may extend to 235-240. On the other hand, sentiment below 210 could turn negative, in which case traders may prefer to exit long positions, Atal said.
Jubilant Foodworks broke below its key support zone of 480, after increasing selling pressure. “As long as the stock remains below 480, the bearish formation is likely to continue on the downside, with possible retests of 450 and 440.”
