Past Transgressions Bring Early End to Bansal’s Tenure at Cleanaway’s Helm; Shares Remain Expensive

News of the imminent departure of Cleanaway’s CEO, Vik Bansal, surprised the market but has no impact on our financial estimates for the no-moat name. Equally, Bansal’s impending exit has no bearing on our valuation of Cleanaway. Nonetheless, a time-value-of-money adjustment leads us to lift our fair value estimate for Australia’s largest waste manager by 2% to AUD 1.80 per share. Cleanaway’s shares responded vigorously to the news that Bansal will vacate the top job in the first half of calendar year 2021 with shares down 8% in early trade. Bansal’s past transgressions--which consist of a history of reportedly combative leadership and an ill-timed sale of approximately 43% of his personal stake in the company--evidently brought him undone. Revelations of Bansal’s questionable managerial conduct first came to light in the financial press in September 2020--for greater detail please see our note “Cleanaway’s Subdued First Quarter 2021 Matches Our Expectations but Shares Remain Pricey” dated Oct.14, 2020.