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Shares of Jubilant FoodWorks plunged 15 per cent to hit a 52-week low of Rs 2,445.35 on the BSE in Monday’s intra-day trade after Pratik Rashmikant Pota stepped down as the Chief Executive Officer (CEO) and Wholetime Director of the company with effect from June 16, 2022.
Jubilant FoodWorks said in an exchange filing that the management accepted the resignation of Pratik Pota in its board meeting held on Friday, March 11, 2022. Pota will continue in his current role till Wednesday, June 15, 2022.
Pota joined the Board of Directors of Jubilant FoodWorks as chief executive officer and whole time director on April 1, 2017.
Jubilant FoodWorks is part of Jubilant Bhartia group and is India’s largest foodservice company. Its Domino’s Pizza franchise extends across a network of 1,380 restaurants in 298 cities. The company has the exclusive rights to develop and operate Domino’s Pizza brand in India, Sri Lanka, Bangladesh and Nepal. At present, it operates in India, and through its subsidiary companies in Sri Lanka and Bangladesh.
The company also enjoys exclusive rights to develop and operate Dunkin’ Donuts restaurants in India, has in operation 27 restaurants across 8 cities in India. Jubilant FoodWorks has ventured into Chinese cuisine segment with its first owned restaurant brand, ‘Hong’s Kitchen’, which now has 11 restaurants across 3 cities. The company has added Indian cuisine of biryani, kebabs, breads and more to the portfolio by launching Ekdum! which now has 7 restaurants across 3 cities.
The stock of Jubilant FoodWorks has fallen below its previous low of Rs 2,475.30 hit on March 7, 2022. In past three months, the stock has underperformed the market falling 35 per cent as against a 4.4 per cent decline on the S&P BSE Sensex. The stock had hit an all-time high of Rs 4,577 on October 13, 2021.
To enhance the liquidity of the company’s equity shares and encourage the participation of small investors by making it more affordable, the board on February 2, 2022 had approved stock split in the ratio of 1:5 i.e. existing one equity share of the company having face value of Rs 10 each into Rs 2.
Starting October-December quarter (Q3FY22), the company would now only disclose Like-for-Like (LFL) growth and not SSSG as it believes that LFL (i.e., same store growth for non-split stores) is a far accurate indicator of their underlying growth, as it will be strongly implementing ‘fortressing’, which is a deliberate strategy going forward.
Restrictions due to the third covid wave at the end of Q3FY22 (peak period for restaurant industry) had an impact on the recovery in the dine-in business, bringing down the overall growth rate for the quarter for Jubilant FoodWorks. Input costs increased YoY and QoQ, but despite that the company delivered EBITDA margin expansion on the back of productivity measures and pricing action taken in Dec’21, analysts at Nirmal Bang Equities said in Q3 result update.
Going forward, at an industry level we do expect delivery business to moderate slightly with dine-in coming back, it will still remain at a significantly elevated level compared to the pre-covid period, the brokerage firm said.
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