Stock Market

CEO exit to affect Jubilant FoodWorks’ stock on Tuesday: Experts

In a statement to the bourses after market hours on Monday, Jubilant FoodWorks said its Chief Executive Ajay Kaul has stepped down to pursue opportunities outside the Jubilant Bhartiya Group and that he would continue in his current role till March 31, 2017.  Market experts expect  Kaul’s exit to affect the stock’s performance on Tuesday when the trading begins.

The exit comes just after Jubilant FoodWorks posted one of the worst quarters in its listed history. The company saw a three percent drop in same store sales growth in Q1 with revenue growth and margins sliding to their lowest levels since the IPO.

Rahul Arora, Chief Executive of Nirmal Bang said initial response from investors hasn’t been great since the news came out. He said that the Jubilant FoodWorks’ stock will definitely open lower on Tuesday.

He added that investors may not take Kaul’s exit too well on the back of a lacklustre Q1 performance and they’ll question if there’s a systemic issue with the company.

 “We expect the stock to react negatively to this news as Mr Ajay Kaul was widely perceived as the architect of the strong supply chain and operational excellence which is the basis of Domino’s 30 mins or free guaranteed home delivery,” Morgan Stanley said in a note.

Gaurang Shah, Head Investment Strategist at Geojit BNP Paribas said the stock may be under pressure on Tuesday. He added that Kaul was the face and voice of the company and it will be difficult for the management to find a replacement.

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