Shares of Jubilant Foodworks slipped as much as 15% on Monday to new low on the back of news that company’s chief executive officer Pratik Pota has tendered his resignation 'to pursue opportunities outside Jubilant Foodworks.'  The shares on Tuesday were trading near it's 52-week low of Rs 24,444 as they hit day's low of Rs 2484.05.

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In a regulatory filing on Friday, the company wrote, "We wish to inform you that the Board of Directors of the Company in their meeting held today i.e. Friday, March 11, 2022, accepted the resignation of Mr. Pratik Rashmikant Pota as the CEO and Wholetime Director of the Company."

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Pota will continue in his current role till Wednesday, June 15, 2022.

"Board has also initiated the process of identifying his successor," read the exchange filing.  

On Monday, stock of Jubilant Foodworks ended lower by 12.27% or Rs 351.35 to 2512.75 per share on the BSE.  Shares have corrected nearly 20% in the past one month as on March 15.

A knee-jerk reaction

Parth Nyati, Founder, Tradingo, said this is a knee-jerk reaction on back of Pota's resignation.  
"We are seeing the knee-jerk reaction and various downgrades on the stock price because the stock sees rerating in the last few years because of Mr. Potra who brought lots of changes in the business model where the stock went to 60PE from 40PE of its one year forward earnings," said Nyati.

However, the stock has already corrected significantly from its 52-week high and the outlook of the company is still very strong, he said "With the IPL going to start soon, we may see buying interest at lower levels in quick service restaurant company. The market will watch out for the new name of the CEO before any meaningful recovery," said Tradingo founder.  

Brokerages cut target price, downgrade stock

Earlier, brokerages downgraded the stock after the CEO's resignation. Macquarie downgraded the stock to underperform and target to Rs 2150 per share as compared to previous estimate of Rs 2865 a share.

Maintaining 'underweight' stance, Morgan Stanley reduced the price target of the counter to Rs 2250 per share.

HDFC Securities reduced target price of this scrip by 16% to Rs 2,400 from current levels.

Support and resistance

As per Nyati, stock of the food service company may see buying interest at current levels. "Technically, It is trading near the critical demand zone of 2500-2400 where we can expect some buying, while if it slips below 2400 then 2100 will be the next important support level," he said, adding that, the 2900-3000 area will act as an immediate resistance zone at any pullback.
Shares of Jubilant food have been given negative return in the past one year and has corrected around 15% as on March 14. The stock has declined 33% in 3 months and 38% in six months as on Monday, showed technical data of the stock. Jubilant food stock traded on 52-week high value of Rs 4,577.45 per share on the BSE on October 13, 2021.

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)