[CAJobPortal Insights] Jubilant CEO’s exit

Good Afternoon,

Wish you a very Happy Holi this week – Let’s be wary of people who change colours rather than the ones who apply colours

Coming to the  discussion point for today
The exit of Jubilant FoodWorks CEO & MD Pratik Pota has brought in a 16% fall in the share price of Jubilant Foodworks – ~ INR 6400 cr crash in market capitalisation
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The stock saw earnings downgrades and an up to 39% cut in price targets.
  1. Macquarie :  from Rs 3,550 to Rs 2,150
  2. Jefferies :  from Rs 3,750 to Rs 3,050
  3. Credit Suisse : from Rs 3,500 to Rs 2,900
  4. JP Morgan : Rs 4,025 to Rs 3,000.
So much for a CEO?
When Pratik Pota joined Jubilant in the year 2017, the stock price moved up 111% in next 1 year.
Similarly, we have other examples of CEO’s who entry turned out to be game changers
– Varun Berry’s joining Britannia in 2014,saw a 159% rise in share price in 1 year
– Sunil D’Souza joining Tata Consumer in 2020, saw a 132% rise in share price in 1 year
– Sandeep Kataria joining Bata in 2017 saw a 25% rise in share price in 1 year
A good CEO certainly can bring about a sea change in the organisational mindset and galvanise the system to reach higher goals
But the larger question is. can companies really afford to be so dependent on an individual’s flair and charisma ? Then where is the role of systems & processes , the role of governance structures and the role of ‘succession planning’
What do you think?