Departure of Kaul Reversed the Fate of Jubilant Food

Jubilant Foodworks today announced that Ajay Kaul, Jubilant FoodWorks Chief Executive Officer (CEO) has resigned from his position, to pursue opportunities outside the company.  Kaul’s resignation happened at a time when Jubilant Food, the master franchisee of Domino’s and Dunkin’ Donuts in India disclosed a slip of 3.2 per cent in its same-store sales growth (SSG) for the first quarter of the fiscal year 2016-17, lowest in seven quarters. Analysts anticipate Kaul’s resignation to profoundly affect Jubilant’s operations and impact the stock in the times to come. The chief concern will now be who Jubilant brings on board as the next CEO.

As expected, Jubilant Food share price dipped sharply by 8%, intraday on Tuesday on the back of Kaul’s resignation. The stock opened at Rs. 950.00 and the day’s low till now is seen at Rs. 925.25. The opening price remained its day’s high value. As the trading session commenced this morning, within the next thirty minutes, approximately 13,88,161 shares exchanged hands with a traded value of Rs. 12,985.55 lacs. The stock volume spurted by more than 2.46 times.

At the BSE, Jubilant Food had tanked 10 per cent on September 6, owing to the company’s poor June quarter performance and has stayed muted since then. Dwindling earnings, narrowing margins and growing competition have struck the stock hard, which is seen to fall 48 percent from its all-time high of Rs 1,931 touched on September 8, 2015. Previously, Jubilant Food disclosed a 31.09 per cent fall in stand-alone net profit amounting to Rs 18.99 crore as compared to a net profit of Rs 27.56 crore in the corresponding period of the previous financial year. Its total income from operations shot up by 6.69 per cent to Rs 608.91 crore during this quarter versus Rs 570.68 crore in the year-ago period. 

On Monday, Jubilant Food share price closed at Rs 1005.60 per unit on the NSE, down 3.54 per cent. Kaul, an IIT as well as XLRI alumnus, was linked with Jubilant Food since 2005. He will continue in his current role till March 2017, as per the company’s filling. Though the company showed no signs of appointing a new CEO, yet it is expected that a new CEO will be announced soon.

Last April, the company had switched roles of Dev Amritesh, the President & Chief operating officer (COO), Dunkin’ Donuts India and Tarun Bhasin, Domino’s Pizza India, president & COO, to strenthen the business. Amritesh was identified as the president & chief business officer (CBO) of Domino’s Pizza India whereas Bhasin was appointed the president & CBO, Dunkin’ Donuts India. In spite of this, Jubilant’s  (JFL) Q1FY17 results came below estimates because of 3.2% Y-o-Y dip in same stores sales. It is the lowest SSG number in the past 7 quarters on the back of muted consumer sentiment, the shift in Ramadan dates and delay in the launch of new products.

Jubilant Food is one of the top 500 performing stocks for this quarter, analyzed by Dynamic Levels research analysts out of the 1700 stocks listed on NSE. The stock is considered as fundamentally healthy. With the announcement of the new CEO and after the impact of the news subsides, it is hoped that the stock will gain momentum and turn active again.