Why India’s most valued hospitality company saw investors skip their pizza slice today

Jubilant FoodWorks, the company that houses India master franchise of the Domino’s pizza chain and other labels like Dunkin Donuts, saw many investors check out of the most valued hospitality firm on the country’s bourses.

The restaurant chain operator—which enjoys a market cap that is even higher than the biggest hotels company, Indian Hotels, the firm behind Taj Hotels—saw its share price skid around 14% on Monday.

Jubilant’s share price cracked to a one-year low of Rs 2,444 apiece before marginally clawing back the losses. This followed the resignation of its CEO Pratik Pota, who has been running the show for the last five years.

Pota is credited with turning around the near-static same-store sales growth of the company, improving unit economics and pumping up operating margins. He is also credited with trying to create new verticals for Jubilant to scale up. Indeed, the company recently launched new quick-service restaurant (QSR) formats such as Hong’s Kitchen and Ekdum!, forayed into the ready-to-cook segment with ChefBoss and brought another foreign label Popeyes.

Pota, an alumnus of IIM Kolkata and BITS Pilani, had joined the firm as CEO in April 2017. Prior to Jubilant FoodWorks, he was the COO of foods and beverages at PepsiCo. Previously, he worked at Bharti Airtel and Hindustan Unilever.

His exit comes even through Jubilant’s board had reappointed him as the chief for a period of three years with effect from April 1, 2022.

The firm is also in a major store expansion drive and the exit of the chief executive puts a question mark on its execution capabilities.

Jubilant FoodWorks had also been expanding inorganically, both in India with strategic minority stakes and in overseas businesses in South Asia as also central Asia and Russia.  The ongoing conflict in Europe and its potential impact on that side of the business also remains a wait-and-watch factor. The firm has close to 200 stores in Russia.

The new chief executive would have to not just ensure the ship stays its course but also tide over the integration risks of the international units.