India: Jubilant FoodWorks shares fall 8.1% as CEO Ajay Kaul quits

Ajay Kaul, Former CEO, Jubilant FoodWorks

Shares of Jubilant FoodWorks Ltd fell as much as 8.13% on Tuesday after the company said its chief executive officer and whole-time director Ajay Kaul resigned.

The stock touched a low of Rs.923.50 a share, a level last seen on 12 February. The stock fell in 14 out of the last 17 trading sessions and has lost 25.06% in this period. The stock has fallen 37.3% so far this year.

At 10.19am, Jubilant FoodWorks fell 6.5% to Rs.940.10, while the benchmark Sensex index fell 0.24% to 28,565.53 points.

“Mr Ajay Kaul has decided to step down as the CEO & whole-time director of the company to evaluate and pursue opportunities outside the Jubilant Bhartia group. Mr Kaul will continue in his current role till March 2017,” the company said in a notice to the BSE.

The company said it has initiated the process of identifying his successor.

“Key exits in the management, apart from the weak earnings reported by the company have added to the uncertainty of the business,” said a senior analyst with a domestic brokerage, requesting anonymity.

In the June quarter, the company posted a net profit of Rs.19 crore, down 31.16% from Rs.27.60 crore a year ago. Total income rose 6.7% to Rs.612 crore.

The company reported a 3.2% decline in same-store sales, earnings before interest, tax, depreciation and amortization (Ebitda) declined 14% year-on-year to Rs.57.6 crore. Gross margins expanded 28 basis points quarter-on-quarter to 76.8% but growth in expenses was ahead of revenue growth. Ebitda margins of 9.5% were down to their lowest level since its initial public offer.

Broking firm ICICI Securities in a 6 September note has cut same-store sales growth estimates for FY17 to nil from 6%. The broking firm has downgraded the stock to sell from add and reduced its target price to Rs.895 a share from Rs.1,068 a share.

Of the analysts covering the stock, 11 have a “buy” rating, 12 have a “hold” rating, while nine have a “sell” rating, showsBloomberg data.

The promoters of HT Media Ltd, which publishes Mint, and Jubilant FoodWorks are closely related. There are, however, no promoter cross-holdings.

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This article was first published on Livemint.com

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.