Jubilant FoodWorks’ stock falls 15% on news of CEO stepping down; brokerages cut target price
The correction comes on the back of news of company’s chief executive officer Pratik Pota stepping down. Most of the brokerages’ term this as setback and negative for quick service restaurant company.
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Shares of Jubilant FoodWorks slipped almost 15 per cent to touch a new 52-week low of Rs 2444 per on the BSE on Monday. The correction comes on the back of news of company’s chief executive officer Pratik Pota stepping down. Most of the brokerages’ term this as setback and negative for quick service restaurant company.
On Friday, March 11, 2022, Jubilant Food in its release to exchanges had said, “The Board of Directors of the company in their meeting, accepted the resignation of Mr Pratik Rashmikant Pota as the CEO and Wholetime Director as he wishes to pursue opportunities outside Jubilant FoodWorks.”
“Pota will continue in his current role till Wednesday, June 15, 2022. The Board places on record its sincere appreciation for the outstanding contribution made by Pota during his tenure. The Board has also initiated the process of identifying his successor,” the company’s statement further read.
At around 10:46 am, the stock was trading nearly 11.5 per cent lower to Rs 2536.15 per share on the BSE, as compared to 0.5 per cent rise in the BSE Sensex during same period.
Amid CEO’s resignation most of the brokerages reduce the price target of Jubilant FoodWorks. In this regard, Macquarie stating that stepping down of CEO raises concerns around execution and earnings growth, it cuts FY22/23/24 EPS estimates by 3/13/15 per cent respectively.
The brokerage downgrades the stock to Underperform and estimates the stock price will slip more to Rs 2150 per share as compared to previous estimate of Rs 2865 per share.
Similarly, even Morgan Stanley reduced the price target of the counter to Rs 2250 per share, while maintaining Underweight stance. It noted that sudden leadership change threatens near-term outlook, however, company is still well-positioned to play long-term growth story in organised food.
The stock in this year is trading at the discount of over 30 per cent (year-to-date) underperforming the BSE Sensex down over 5.5 per cent during the same time.
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