Street welcomes Jubilant's call to put Khetarpal at helm
Stock surges nearly 10% even as company posts 8.2% decline in profit in Q4FY22
Jubilant Foodworks has appointed Sameer Khetarpal as CEO & managing director effective from September 5, the company said in a stock exchange filing on Monday. Khetarpal would take over from Partik Pota, current CEO and whole-time director.
Following the news, the company’s stock surged and closed 9.64 per cent up at ~566.80 on the BSE, despite it reporting an 8.2 per cent decline in net profit in Q4FY22 to ~96.8 crore because of higher expenses. This was below Street estimates which pegged net profit at ~111.8 crore, even as the revenue at ~1,176 crore was slightly better than expected. Bloomberg estimates stood at ~1133.6 crore.
Shares of Jubilant Foodworks had plunged over 12 per cent on March 14 this year following the news that Pota had decided to resign. The move by Pota came as a surprise as the Board had approved his re-appointment in June 2021 as the CEO for three years ending March 2025. Since mid of March, the stock had largely moved in the ~500-600 range before falling to a 52-week low of ~451.60 on May 12, 2022.
Khetarpal would join Jubilant Foodworks after a six-and-half year stint at Amazon, the company stated. At Amazon, he launched and scaled several businesses like Amazon Fresh, Amazon Food, and Amazon Pharmacy. “He has built these businesses with world-class supply chain infrastructure, deeply embedded with technology and several inorganic investments and partnerships,” the company said in its filing.
In his 25-year career, he has served in several leadership roles. Before Amazon, Khetarpal was a partner at Mckinsey and Company, where he served several clients on topics related to business building and transformation, and was instrumental in building data-driven service lines used by several Fortune 500 companies, Jubilant Foodworks said. Khetarpal has previously worked with GE Capital and Hindustan Unilever, too.
Shyam S Bhartia, chairman, and Hari S Bhartia, co-chairman, Jubilant Foodworks, said in the filing: “We are now a multi-country, multi-brand company with deep investments in technology. We are looking to further our investments across our portfolio of brands to become a food tech powerhouse.”
“Sameer, with his strengths in building digital-first businesses in related spaces will provide the necessary leadership to our business. He is a strong, dynamic and values-driven leader with an impressive track record of delivering consistent high-quality performance in tough consumer businesses. The board warmly welcomes Sameer to the role and wishes him every success,” they said.
Khetarpal said as India’s largest foodservice company, Jubilant Foodworks, is uniquely poised to scale non-linearly across multiple businesses and geographies.
The announcement came on a day when the company announced its March quarter results, in which it reported an increase in revenue, even as net profit declined. The revenue during the quarter was up 13.3 per cent YOY to ~1,176 crore a tad higher than Bloomberg's estimates of ~1133.6 crore.
In its release, the company said that in its pizza chain, Domino’s, the increase in revenue was driven by robust growth in the delivery channel. It said the dine-in and takeaway channels combined registered moderate growth. Its PBIDT stood at ~ 285.8 crore, up 8.5 per cent compared to last year.
The company opened 80 new Domino’s stores taking the network strength for Domino’s in India to 1,567 stores. It also entered 17 new cities during the quarter to expand its reach to 337 cities across India. Jubilant Foodworks also opened 4 new restaurants for Popeyes and one restaurant each for Dunkin’, Hong’s Kitchen and Ekdum! during the quarter.
During the quarter, in Sri Lanka, Jubilant Foodworks registered system sales growth of 80.6 per cent and opened 3 new stores taking the network strength to 35 stores.
In Bangladesh, system sales grew by 44.5 per cent and opened an outlet taking the store count in Bangladesh to nine. The company has also completed a 100 per cent acquisition of its subsidiary with an intention to further strengthen its presence and scale of operations in the fast-growing and critical market of Bangladesh.
Shyam S Bhartia and Hari S Bhartia in the statement stated: “This has been a momentous year for the company on two accounts. A series of timely, strategic investments in strengthening the digital ecosystem for delivery and setting up an integrated supply chain network has helped the company register record revenue, profitability and store growth numbers even in the face of adversity and inflationary challenges. This in turn has enabled us to foray into new categories and make strategic investments which will continue to create significant future value for all stakeholders.”