Jubilant FoodWorks CEO’s Exit To Add To Risks, But Remain Confident Of Long-Term Story

Analysts expressed surprise over the sudden resignation of Jubilant FoodWorks’ CEO and Wholetime Director Pratik Pota, since his re-appointment as CEO for three years from April 2022 to March 2025 was approved by the company.

  • Pota will continue in his current role till June 15, 2022, the company said in an exchange filing Friday. Brokerages noted the efforts taken under the leadership of Pota such as pricing discipline, focus on ‘Everyday Value’, entry into new categories and investment strategy, have been instrumental in driving Jubilant FoodWorks’ growth.
  • Analysts are of the view that the exit added to several risks as Pota’s executive expertise would be missed during the store expansion that the company planned to undertake across geographies over the next 3-5 years, as they reduced the target price on the stock
  • Jubilant FoodWorks’ recent acquisition of stake in DP Eurasia, the exclusive master franchisee of Domino’s Pizza brand in Turkey, Russia, Azerbaijan and Georgia, has been adversely affected by Russia’s invasion of Ukraine.
  • Analysts expected Jubilant to be able to write-off part of the Rs 200 crore investment in DP Eurasia in the coming quarters, but they saw the foray as ‘not strategically aligned capital allocation’.
  • While brokerages remain positive on the long-term prospects of QSR industry, pricing model and the company’s superior business model, they see the high valuations as a concerning factor.

Jubilant FoodWorks Slips The Most In Nearly Two Years

Shares of Jubilant Foodworks fell over 14% in intraday trade, the most since March 23, 2020, as analysts cut target price and expressed surprise over the sudden resignation of the company’s CEO and Wholetime Director Pratik Pota.

  • Brokerage believe that the exit added to several execution risks and could affect the growth prospects.
  • Trading volume on the stock was nearly nine times the 30-day average volume at this time of the day.
  • Of the 31 analysts tracking the company, 19 maintain ‘buy’, six suggest ‘hold’ and six recommend ‘sell’. The overall consensus price of analysts tracked by Bloomberg implies an upside of 35.4%.

Source: Bloomberg, Brokerage Note, Exchange Filing

Share Market Live: Sensex, Nifty Rise; Jubilant FoodWorks Slips The Most In Two Years
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Source: Bloomberg

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