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Caf Coffee Day IPO


Valuation model Data Book

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Contents
Model Map.............................................................................................................................................. 3
About the company ................................................................................................................................ 4
Valuation Methodology .......................................................................................................................... 6
Assumptions............................................................................................................................................ 7
Revenue .................................................................................................................................................. 9
Expenses ............................................................................................................................................... 10
Working Capital and Depreciation ........................................................................................................ 11
Working Capital................................................................................................................................. 11
Depreciation...................................................................................................................................... 11
Loan and Capital Expenditure ............................................................................................................... 13
Loans ................................................................................................................................................. 13
Capital Expenditure ........................................................................................................................... 13
Financial Statements ............................................................................................................................. 15
Profit and Loss................................................................................................................................... 15
Balance Sheet.................................................................................................................................... 15
Cash Flow .......................................................................................................................................... 16
Ratios .................................................................................................................................................... 18
Valuation ............................................................................................................................................... 20
DCF Valuation.................................................................................................................................... 20
Relative Valuation ............................................................................................................................. 21

Page 3 of 22

Model Map
Data flow of the model is as shown in the figure below. Majorly all inputs and assumptions are
entered in the inputs sheets. These inputs are used to do all the calculation which are present in
the Income sheet, Expense sheet, Working Capital sheet, Loan sheet, Capital Expenditure sheet,
Depreciation sheet and DCF Valuation sheet. Ratios and Valuation are the major output sheets
showing the ratios and IPO valuation based on calculations done.

Input sheets

Calculations

Output

P&L/CF/BS
Income/
Expense
About

Working
Capital

Ratios

Loan
Assumptions

Capital
Expenditure
Depreciation
DCF
Valuation

Valuation

Page 4 of 22

About the company


Caf Coffee Day is a coffee part of Coffee Day Global Limited. They source their coffees from
thousands of small coffee planters. They pioneered in the industry and brought in the concept of
cafes to India. The first one opened in 1996 on Brigade Road in Bangalore and continues to be one of
the most happening places in the city. CCD today is totally in tune with its target audience. Its a
strong relationship the brand shares. It's been an exciting journey since then, becoming the largest
organised retail cafe chain in the country. With their international presence, you can travels to
Austria, Czech Republic or Malaysia, stop by a CCD there for the taste of a blend from home.
RANGE OF OUTLETS:
1. Caf Coffee Day A lot can happen over coffee
Launched in 1996 in Bangalore, Karnataka, India
Over 1423 cafes spread across 209 cities/towns across India
2. The Lounge
Wider range of Food & Beverages addressing meal needs as well
Targeting a more mature and affluent group of customers. An expressive, explorative
space (owing to the alternate coffee drinking experiences and world cuisine options)
conducive to network and unwind
42 outlets spread across seven cities
3. The Square
Premium range of cafes serving Single Origin Coffees from around the world
Perfect variety of food that complements the wide range of coffees
Showcasing a boutique of brewing systems and coffee beans from around the world
Catering to the absolute connoisseur and the well-travelled
7 outlets in four cities.
4. XPRESS Outlets
Caters to the mobile population of a city always on the move, always in a hurry
Present in all the key city spots. 'Wherever you go, I am there'that's the motto
No elaborate decorations, just fresh, delicious snacks and steaming beverages that come
in convenient sizes
Total outlets: 590
Found in Shopping malls, Supermarkets, Multiplexes, Corporates, Airports, Railway
stations, Depots, Petrol pumps, Parks, Educational Institutions etc.
GROUP COMPANIES
1) Coffee Day Beverages
Coffee Day Beverages deals with dispensing machines that provide, at the touch of a button, hot
coffee and tea, flavoured milk and even soups through its machines called Celesta. Celesta dispenses
beverages the way you need them.

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2) Coffee Day Fresh & Ground
Freshly ground coffee in mix and match flavours and ratios is the specialty of Fresh & Ground. Fresh
& Ground stores in markets and shopping points cater to coffee lovers who love to make their own
filtered coffee at home. This traditional-thinking, quality conscious shopper is a royal customer. They
look out for freshness and quality, but want to throw in a bit of their own character too. The freshly
procured coffee from plantations is packaged in the way to ensure consistency in freshness. Fresh &
Ground specializes in authentic filter coffee with region specific blends of coffee and tea customized
to demand. Besides an affordable array of coffee powders, we also retail tea to the tea-maker too.
Visit www.coffeedayfng.com for more details.
3) Coffee Day Exports
Coffee Day Exports is truly involved in growing, trading, retailing and exporting world-class coffee. It
has a heritage of over 130 years. Coffee Day Exports is one of the largest exporters of green coffee in
India, since 1999. They also export to the Middle East, Europe and Japan. It has invested in research
and development and applied the learning successfully to improve the promotion of various coffee
blends and augment its exports.
4) Coffee Day Hotels & Resorts
Coffee Day Hotels & Resorts was formed as a subsidiary of Coffee Day Global Limited, the
Chikmagalur resort of The Serai was declared open. The philosophy was single-minded - to open
exclusive retreats in the quietest corners of the country and to offer an experience drenched in
luxury and understated elegance. It is a place where one would come to be pampered like nowhere
else. The Serai, Chikmagalur, as the first such resort did this job brilliantly, nestled as it was in the
greens of the lush coffee plantations around. The concept was so appreciated that we took these
resorts to other reclusive niches to Bandipur and Kabini. Visit www.theserai.in for more details.
Range of Outlets
Caf Coffee Day

No. of Outlets
1423

Cities
209

About
Regular Cafes

The Lounge

42

Wider range of Food & Beverages addressing


affluent customers

The Square

Premium range of cafes catering to the absolute


connoisseur

XPRESS Outlets

590

Stand up, walk away, take away Xpress caf

Page 6 of 22

Valuation Methodology
Valuation for Public Offering depends on Qualitative and Quantitative factors. We will discuss both
of them and then derive the valuation for equity proceeds.
Qualitative Factors
Coffee Day has many business strengths allow us to successfully compete in the industry.

Strong home-grown brands with a substantial market presence and proven legacy
Large pan India coffee retail network targeting multiple consumption points and customer
segments
Highly optimized and vertically integrated coffee business
Highly scalable platform for growth driven by deep operational expertise
Low risk, built-to-suit model technology parks with predictable cash flow
Track record of value creation through our non-coffee businesses
Visionary Promoter supported by an experienced and professional management team across
coffee and non-coffee businesses

Quantitative Factors
The face value of the Equity Shares is INR 10 each.
Issue Price is calculated as the average of valuation multiples. The valuation multiples used are

EV/EBIDTA(Peak) 7x to 8x
EV/EBIDTA (Average) 7x to 10x
P/E 25x to 30x

Issue price is decided keeping the above multiples as reference, and looking at the investors
response. Institutional investors are consulted and a particular proportion is decided to be reserved
for them, and rest is open for public issue.
P/E multiple average for the industry is ~ 20x. We expect Coffee Day to trade at a premium due to its
premium brand value, unique business model and large presence across cities. Hence, a P/E
multiple range of 25x to 30x has been considered.
Average P/E Multiple of peers
1. Tata Global Beverages

25.86

2. Bombay Burmah

13.75

3. Tata Coffee

15.51

4. CCL Products

27.56

Page 7 of 22

Assumptions
1. Base Year
2015 has been taken as the base year, as it is a growing company and current year forms the
base of the expansion plans for the firm. Thus all the growth rates are applied on 2015
values.
2. 2015 values
Please note Draft Red Herring Prospectus gives full year values till 2014 and 9 months values
for 2015. We have extrapolated the 9 months values for full year 2015. This has been done
to get the current base of values upon which the growth rates should be applied.
3. Growth Rate
Growth rate in revenue per outlet: With the proceeds of IPO and robust expansion plans, we
expect the growth in revenue per outlet to be 15% for FY 16 to FY 19, and 10% thereafter.
Growth rate in other income has been considered to be 20%.
4. Long term inflation rate for Machinery and Equipment and Furniture and Fixtures has been
considered as 8% conservatively.
5. Increase in number of outlets: 10% till FY 19, and 5% thereafter.
6. Capex Funding: Debt: 50%, Equity 50%
7. Proceeds of IPO: 50% of the proceeds are assumed to be used for debt reduction, and 50%
to be kept as cash for funding future growth
8. Working capital: Working capital days is calculated based on the current financial figures of
Coffee Day.
9. Depreciation rates: Depreciation rates are as mentioned below
MACHINERY & EQUIPMENT
Book Depreciation
Existing
Additions
Tax Depreciation

SLM
SLM
WDV

10
15
10%

FURNITURE & FIXTURES


Book Depreciation
Existing
Additions
Tax Depreciation

SLM
SLM
WDV

10
15
20%

10. Tax assumptions: Current corporate tax structure has been considered.

Page 8 of 22
Regular Tax: 30%, MAT: 18%, Education Cess: 3%, Surcharge: 10%
11. Valuation assumptions:
DCF
Risk Free Rate of Return
Beta
Terminal Growth rate
No. of shares (In Crore) (Including new issue)
Amount to be raised (In Crores)

8%
1.10
5%
20.83
1,200.00

12. Values have been projected till 2030. All P&L,BS,CF statements have been made till 2030

Page 9 of 22

Revenue
A snapshot of revenue calculation is shown below:
Particulars

Mar-16

Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

Mar-22

Revenue
Caf Coffee Day

318

346

381

419

439

441

463

The Lounge

386

419

460

501

526

526

550

The Square

739

904

986

1,068

1,068

1,021

1,021

XPRESS Outlets

175

178

196

216

226

227

238

1,320

1,584

1,901

2,281

2,737

3,285

3,941

2,939

3,431

3,923

4,484

4,996

5,501

6,214

Others
Total

Revenue has been calculated for each store category and other income by the below mentioned
methodology.

Revenue for a year = Previous year per out outlet revenue for the category x previous year
number of stores x (1+Growth in number of stores for the year) x (1+increase in per store
revenue for the year)

Revenue for other income = Previous year other income x growth in other income for the
year

Page 10 of 22

Expenses
Expenses have been calculated considering the same proportion of this years expenses with respect
to income. The values for the base year have been shown below for reference:
Particulars

Income
Revenue
Other Operating Income
Total Operating Income
Expenses
Manufacturing Cost
General & Administrative Cost
Selling & Other Expenses
Total Operating Expenses

Mar-15

100%
3%

2,346
65
2,412

-23%
-41%
-21%
-85%

(544)
(963)
(491)
(1,999)

It has been assumed that the current proportion will be maintained for the future years as well.
This is as conservative approach has no cost synergies have been taken into account which would
come into play with the expansion and better supply chain management.
Particulars

Mar-16

Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

Mar-22

-23%
MANUFACTURING & RAW MATERIAL COST
Caf Coffee Day

(74)

(80)

(88)

(97)

(102)

(102)

(107)

The Lounge

(90)

(97)

(107)

(116)

(122)

(122)

(128)

The Square

(171)

(210)

(229)

(248)

(248)

(237)

(237)

(41)

(41)

(46)

(50)

(52)

(53)

(55)

Others

(306)

(367)

(441)

(529)

(635)

(762)

(914)

Sub - Total

(682)

(796)

(910)

(1,040)

(1,159)

(1,276)

(1,442)

Caf Coffee Day

(130)

(142)

(156)

(172)

(180)

(181)

(190)

The Lounge

(158)

(172)

(189)

(206)

(216)

(216)

(226)

The Square

(303)

(371)

(405)

(438)

(438)

(419)

(419)

(72)

(73)

(81)

(89)

(93)

(93)

(98)

(542)

(650)

(780)

(936)

(1,123)

(1,348)

(1,618)

(1,206)

(1,408)

(1,610)

(1,840)

(2,050)

(2,257)

(2,550)

Caf Coffee Day

(67)

(72)

(80)

(88)

(92)

(92)

(97)

The Lounge

(81)

(88)

(96)

(105)

(110)

(110)

(115)

The Square

(155)

(189)

(206)

(224)

(224)

(214)

(214)

(37)

(37)

(41)

(45)

(47)

(48)

(50)

Others

(276)

(332)

(398)

(478)

(573)

(688)

(825)

Sub - Total

(615)

(719)

(822)

(939)

(1,046)

(1,152)

(1,301)

XPRESS Outlets

-41%
GENERAL & ADMINISTRATIVE EXPENSES

XPRESS Outlets
Others
Sub - Total
-21%
SELLING & OTHER EXPENSES

XPRESS Outlets

Therefore, expenses have been calculated as follows:

Manufacturing expense
General and Administrative expense

=
=

23% of revenue for the year


41% of revenue for the year

Selling and Other Expenses

21% of revenue for the year

Page 11 of 22

Working Capital and Depreciation


Working Capital
Working capital is based on the current number of days of current assets and current liabilities.
These numbers are as mentioned below:
Working Capital
Unit
Current Assets
Accounts Receivables
Days
Inventory
Days
Loans and Advances
Days
Other Current Assets
Days
Current Liabilities
Accounts Payable
Days
Others
Days
Net Working Capital Cycle
Days
These assumptions are used to calculate the net working capital requirement.
Mar-16
Current Assets excluding Cash
Accounts Receivables
Inventory
Loans and Advances
Other Current Assets
Total Current Assets excluding Other

Mar-17

Mar-18

Value
52
21
22
8
20
131
-47

Mar-19

Mar-20

Mar-21

346
141
147
53

433
176
184
66

505
206
215
77

578
235
245
88

661
269
280
101

736
300
313
112

810
330
344
124

686

859

1,003

1,147

1,311

1,461

1,608

Current Liabilities & Provisions


Accounts Payable
Others
Short-term loans
Total Current Liabilities & Provisions

131
865
491
1,487

164
1,083
1,247

192
1,264
1,456

219
1,446
1,665

251
1,652
1,903

279
1,841
2,121

308
2,027
2,335

Net Working Capital

Current Assets

(801)

(388)

(453)

(518)

(592)

(660)

(726)

MPBF

Margin Money
Interest on Working Capital Loan

Working capital requirement is financed through working capital borrowing and margin money.
Margin = 25%, Interest on working capital = 15%

Depreciation
Book depreciation is calculated based on the following assumption
Depreciation
MACHINERY & EQUIPMENT
Book Depreciation
Existing
Additions

Method

Useful Life / %

SLM
SLM

10
15

SLM
SLM

10
15

FURNITURE & FIXTURES


Book Depreciation
Existing
Additions

Page 12 of 22
Tax depreciation is calculated based on the following assumption
MACHINERY & EQUIPMENT
Tax Depreciation
FURNITURE & FIXTURES

WDV

10%

Tax Depreciation

WDV

20%

Gross Block, Accumulated depreciation, Net Block is calculated for both Machinery and Equipment
and Furniture and Fixture. Tax and Book Depreciation is calculated separately.
Book Depreciation

Mar-16

Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

2,013

2,105

2,192

2,324

2,468

2,547

MACHINERY & EQUIPMENT


Gross Block
Additions in Block
Depreciation

955
(169)

93
(176)

86
(181)

132
(190)

145
(200)

79
(205)

(169)
1,843

(345)
1,760

(526)
1,665

(717)
1,607

(917)
1,552

(1,122)
1,426

Gross Block

821

892

959

1,062

1,174

1,235

Additions in Block
Depreciation

(82)

72
(87)

67
(91)

102
(98)

112
(106)

61
(110)

Accumulated Depreciation
Net Block

(82)
739

(169)
723

(260)
699

(358)
703

(464)
710

(574)
661

Gross Block
Depreciation

2,833
(252)

2,998
(262)

3,151
(273)

3,385
(288)

3,642
(305)

3,782
(315)

Accumulated Depreciation
Net Block

(252)
2,582

(514)
2,484

(787)
2,365

(1,075)
2,310

(1,380)
2,262

(1,695)
2,087

Accumulated Depreciation
Net Block
FURNITURE & FIXTURES

Total

Tax Depreciation

Mar-16

Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

2,013

2,105

2,192

2,324

2,468

2,547

MACHINERY & EQUIPMENT


Gross Block
Depreciation
Accumulated Depreciation
Net Block

(201)
(201)
1,812

(181)
(382)
1,723

(172)
(555)
1,637

(164)
(718)

(161)
(879)

(159)
(1,038)

1,605

1,589

1,509

FURNITURE & FIXTURES


Gross Block
Depreciation

821
(164)

892
(131)

959
(119)

1,062
(109)

1,174
(108)

1,235
(109)

Accumulated Depreciation
Net Block

(164)
656

(295)
597

(415)
545

(524)
538

(631)
543

(740)
495

Total
Gross Block
Depreciation
Accumulated Depreciation
Net Block

2,833
(365)
(365)
2,468

2,998
(312)
(678)
2,320

3,151
(292)
(970)
2,182

3,385

3,642

3,782

(273)
(1,242)

(268)
(1,510)

(267)
(1,778)

2,143

2,132

2,004

Page 13 of 22

Loan and Capital Expenditure


Loans
Existing and new term loan is assumed to be having tenure of 10 years @12% rate of interest per
annum. New loan is drawn if there is a capex requirement which cannot be met through cash.

Loan - Schedule
Particulars
Opening Balance
Add: Draw Down
Less: Repayments
Closing Balance

Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
2,588
2,329
2,070
1,812
1,553
(259)
(259)
(259)
(259)
(259)
2,329
2,070
1,812
1,553
1,294

Interest on Loan

295

264

233

202

171

Whenever there is a fresh drawdown, the tenure of the loan amount if fixed for next 10 years @
12% Rate of interest.
Year
Particulars
Repayment - FY16 Loan
Repayment - FY17 Loan
Repayment - FY18 Loan
Repayment - FY19 Loan
Repayment - FY20 Loan
Repayment - FY21 Loan
Repayment - FY22 Loan
Repayment - FY23 Loan
Repayment - FY24 Loan
Repayment - FY25 Loan
Repayment - FY26 Loan
Repayment - FY27 Loan
Repayment - FY28 Loan
Repayment - FY29 Loan
Repayment - FY30 Loan
Total

1
Mar-16
-

2
Mar-17
-

3
Mar-18
-

4
Mar-19
-

5
Mar-20
-

6
Mar-21
-

7
Mar-22
-

Capital Expenditure
Total Capex is calculated based on the expense on Machinery and Equipment and Furniture and
Fixture on new stores and inflation.
Total Capex for a year = Number of new outlets x Cost per outlet x (1+Inflation rate)

Page 14 of 22

APPLICATION OF FUNDS
MACHINERY & EQUIPMENT
Outlets
Caf Coffee Day
The Lounge
The Square
XPRESS Outlets
Total

Mar-15

Mar-16
83
3
1
6
93

Mar-17
78
2
1
6
86

Mar-18
95
3
1
34
132

Mar-19
104
3
1
37
145

Mar-20
57
2
20
79

Mar-21
60
2
21
83

Mar-15

Mar-16
64
2
1
4
72

Mar-17
60
2
1
4
67

Mar-18
73
2
0
26
102

Mar-19
81
2
0
29
112

Mar-20
44
1
15
61

Mar-21
46
1
16
64

Mar-15

Mar-16
148
5
2
10
164

Mar-17
138
4
2
10
154

Mar-18
168
5
1
60
234

Mar-19
185
5
1
66
257

Mar-20
101
3
35
140

Mar-21
106
3
37
147

FURNITURE & FIXTURES


Outlets
Caf Coffee Day
The Lounge
The Square
XPRESS Outlets
Total
TOTAL
Outlets
Caf Coffee Day
The Lounge
The Square
XPRESS Outlets
Total

This expense if funded by sources of fund in the following order


1) Cash
- (to the extent cash is available)
2) 50% Debt: 50% Equity infusion - (Balance capex after cash)

SOURCES OF FUNDS
FUNDED BY
Sources
Cash
Debt
Equity
Total

Mar-15

Mar-16
164
164

Mar-17
154
154

Mar-18
234
234

Mar-19
257
257

Mar-20
140
140

Mar-21
147
147

Page 15 of 22

Financial Statements
Profit and Loss
Using the calculation of Revenue, Expense, Working capital, Capex requirement, Loan schedule,
Depreciation and various assumptions related to life of assets and interest rates etc. comprehensive
financial statements are prepared for each year. All the line items and format is as shown below
Particulars
Income
Revenue
Other Operating Income
Total Operating Income

Income sheet

Expenses
Manufacturing Cost
General & Administrative Cost
Selling & Other Expenses
Total Operating Expenses

Expense sheet

EBIDTA
Other Non Operating Income
Depreciation
Other Amortizations
EBIT
Interest
Interest on Term Loan
Interest on Working Capital
Total Financing Charges
PBT
Taxation
Current Tax
Mat Credit (Entitlement) / Reversal
Deferred Tax
PAT before minority interest and profit

Depreciation sheet

Loan and Working Capital


sheet

Tax sheet

from associates
Less: Minority share in (profit)/ loss
Add: Share in profit/(loss) of associates
Net Profit/(Loss) as restated

Sheets in the right hand side are the one where data flows from in the P&L sheet.

Balance Sheet
Balance sheet shows the overall financial statement of the company as on date. A standard balance
sheet has been prepared for each year with the format as shown below-

Page 16 of 22
Particulars

Mar-15

Mar-16

Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

EQUITY AND LIABILITIES


Shareholders funds
(a) Share Capital
(b) Reserves and Surplus

1,599
34
1,565

1,680
34
1,646

1,873
34
1,839

2,171
34
2,137

2,582
34
2,548

3,096
34
3,062

3,717
34
3,683

506

505

507

512

521

532

547

Non-current Liabilities
(a) Long-term borrowings
(b) Deferred Tax Liability
(c) Other long-term liabilities
(d) Long-term provisions

2,852
2,588
26
192
46

2,593
2,329
26
192
46

2,334
2,070
26
192
46

2,075
1,812
26
192
46

1,816
1,553
26
192
46

1,558
1,294
26
192
46

1,299
1,035
26
192
46

Current Liabilities
(a) Trade payables
(b) Other current liabilities
(c) Short-term loans
(d) Short-term provisions

1,517
131
865
491
29

1,277
164
1,083
29

1,485
192
1,264
29

1,694
219
1,446
29

1,933
251
1,652
29

2,150
279
1,841
29

2,364
308
2,027
29

Sub-Total

6,473

6,054

6,200

6,453

6,851

7,335

7,927

Non-current Assets

4,508

4,416

4,302

4,259

4,222

4,052

3,878

Goodwill on consolidation
(a) Fixed assets
(i) Tangible assets
(ii) Intangible assets
(iii) Capital work-in-progress
Machinery & Equipment
Furniture & Fixtures
(b) Non-current investments
(c) Long-term loans and advances
(d) Other non-current assets

510
2,883
1,879
50
955
955
501
485
129

510
2,791
2,582
45
164
93
72
501
485
129

510
2,677
2,484
40
154
86
67
501
485
129

510
2,633
2,365
35
234
132
102
501
485
129

510
2,597
2,310
30
257
145
112
501
485
129

510
2,426
2,262
25
140
79
61
501
485
129

510
2,253
2,087
20
147
83
64
501
485
129

Current Assets
(a) Current Investments
(b) Cash and cash equivalents
(c) Accounts Receivables
(d) Inventory
(e) Short-term loans and advances
(f) Other current assets

1,965
3.01
1,276
346
141
147
53

1,638
2.95
776
433
176
184
66

1,897
2.87
892
505
206
215
77

2,194
2.84
1,044
578
235
245
88

2,629
2.82
1,315
661
269
280
101

3,284
2.71
1,820
736
300
313
112

4,049
2.59
2,438
810
330
344
124

Sub-Total

6,473

6,054

6,200

6,453

6,851

7,335

7,927

Minority Interest

ASSETS

Notes
i)
ii)
iii)

Provisions have been kept constant


Other Non-current assets, Non-current investments and Long-term loans and advances
have been kept constant as their treatment would be at the discretion of the company
Short term and Long term provisions have been kept constant

Cash Flow
Standard Indirect Cash flow statement has been prepared for all years in the format shown below

Page 17 of 22
Particulars

Mar-15

Mar-16

Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

Cash Flow Statement


Cash Flow from Operations
PAT
+ Depreciation and Amortization
+ Interest
- Change in Working Capital
+ Deferred Taxation

219
80
256
295
(413)
-

791
195
267
264
65
-

879
303
278
233
65
-

989
419
293
202
74
-

Cash Flow from Investing


Investment / (Disinvestment) of Current Investments
Capital Expenditure

(164)
0.06
(164)

(153)
0.08
(154)

(234)
0.03
(234)

(257)
0.02
(257)

(140)
0.11
(140)

(147)
0.12
(147)

Cash Flow from Financing


Interest & other finance charges
Inc / (Dec) in Equity
Inc / (Dec) in Debt

(554)
(295)
(259)

(523)
(264)
(259)

(492)
(233)
(259)

(461)
(202)
(259)

(430)
(171)
(259)

(399)
(140)
(259)

1,276
(500)
776

776
115
892

Opening Cash Balance


Cash Movement
Closing Cash Balance

1,276

892
153
1,044

1,044
271
1,315

1,074
525
310
171
68
-

1,315
505
1,820

1,162
636
320
140
67
-

1,820
617
2,438

Page 18 of 22

Ratios
Following ratios have been calculated:
1
2
3
4
5
6
7
8
9
10
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31

Long Term Debt / Net Worth (incl DTL)


Long Term Debt / Net Worth (excl DTL)
Total Debt (Net) / Net Worth (incl DTL)
Total Debt (Net) / Net Worth (excl DTL)
TOL/TNW (DTL - part of Net Worth)
TOL/TNW (DTL - part of Liability)
Equity Ratio (Equity / Assets)
Debt Ratio (Total Debt / Total Assets)
Times interest earned (EBIT / total interest)
ISCR
Total Debt/EBIDTA
Total Net Debt/EBIDTA (Debt considered excl cash)
Current Ratio (Excl next yr repayments) - Including Cash
Current Ratio (Incl next yr repayments) - Including Cash
Current Ratio (Excl next yr repayments) - Excl Cash
Current Ratio (Incl next yr repayments) - Excl Cash
EBIDTA (%)
Depreciation (%)
EBIT (%)
Interest on Term Loan (%)
Interest on Working Capital (%)
EBT (%)
Tax (%)
PAT (%)
Adjusted PAT(%)
EPS

The definition of various items to calculate ratios has been shown explicitly along with the
calculation sets for each year.
1. Net Debt
Long Term Debt
Secured Loans
Other Loans
Total Long Term Debt
Less: Long Term Cash
Net Long Term Debt

Long Term Debt


Working Capital Debt
Total Debt
Less: Cash
Total Net Debt

2. Total Outside Liabilities

Page 19 of 22
Total outside liabilities
Total Debt
Current Liabilities
Other Liabilities
Total Outside Liabilities
Less: Cash
Total Outside Liabilities (net of cash)

3. Net Worth
Reserve & Surplus
Less: Misc Exp w/off
Net Worth (w/o DTL)
Deferred Tax Liability
Net Worth (with DTL)

4. Net fixed assets


Gross Fixed Assets
CWIP
Less: Depreciation
Net Fixed Assets

These ratios are used to check the covenants and to financial performance for the company in the
future years. They are also used to get the value of various multiples for Valuation purpose.

Page 20 of 22

Valuation
DCF Valuation
DCF valuation has been done by calculation Free Cash Flow to Equity for each year, and then
discounting the cash flows to present year by Calculation the Net Present Value per equity share.

Free Cash Flow to Equity = Net Income + Depreciation Capital Expenditure Change in
Working Capital + Net Borrowings
Terminal Growth Rate of 5 % has been considered
Discount rate = Risk Free rate + Beta x ( Market rate of return Risk Free rate) = 8.1 % + 1.1 x
(15.1 % - 8.1%) =15.8%

A snapshot of all the calculations has been shown in the next sheet

Page 21 of 22

Relative Valuation
Multiples used for Valuation with the multiple range is as follows
1. EV/EBIDTA (Peak) 7x to 8x
2. EV/EBIDTA (Average) 7x to 10x
3. P/E 25x to 30x
We expect Coffee Day to trade at a premium valuation to peers because of its strong brand,
and unique business model

Average PE Multiple of peers


1. Tata Global Beverages

25.86

2. Bombay Burmah
3. Tata Coffee
4. CCL Products

13.75
15.51
27.56

Enterprise Value = Total Debt Cash + Total Equity


Therefore, Market Cap = Enterprise Value Total Debt + Cash
1. EV/EBIDTA Valuation(Peak) multiple calculation
Valuation

EV/EBIDTA Valuation (Peak)


Effective Year
Peak EBIDTA

Rs. Crore

7 Times
Mar-17
2,917

8 times
Mar-17
2,917

EV/EBIDTA multiple
EV

x
Rs. Crore

7
20,418

8
23,335

Long Term Debt


Working Capital Debt
Less: Cash available
Total Debt
Market Cap (B/f)
No. of existing shares
Additional shares
Total No. of shares
Expected Market Price

Rs. Crore
Rs. Crore
Rs. Crore
Rs. Crore
Rs. Crore
Crore
Crore
Crore
Rs

2,070
(1,820)
250
20,168
20.83
20.83
968

2,070
(1,820)
250
23,085
20.83
20.83
1,108

2. EV/EBIDTA Valuation (Average) multiple calculation


Average EBIDTA

Valuation Valuation
7 Times
10 times
Rs. Crore
783
783

EV/EBIDTA multiple
EV

x
Rs. Crore

8
6,266

10
7,833

Long Term Debt


Working Capital Debt
Less: Cash available
Total Debt
Market Cap (B/f)
No. of existing shares
Additional shares
Total No. of shares
Expected Market Price

Rs. Crore
Rs. Crore
Rs. Crore
Rs. Crore
Rs cr
Mio
Mio
Mio
Rs

2,070
(1,820)
250
6,016
20.83
20.83
289

2,070
(1,820)
250
7,583
20.83
20.83
364

EV/EBIDTA Valuation (Avg)

Page 22 of 22
3. P/E Multiple
PE Multiple Valuation
Average Net Profits

Rs cr

PE Multiple #
No. of Shares
EPS
Expected Market Price

x
Mio
Rs.
Rs cr

Valuation Valuation
25 Times 30 times
458
458
25
20.83
22
550

30
20.83
22
660

Public Issue Price IPO price has been considered as the average of the three valuation
multiples
Particulars
Valuation

EV/EBIDTA (Peak)
7
8
968.37
1,108.42

EV/EBIDTA (Avg)
7
10
288.87
364.09

PE
25
550.32

Average
30
660.38

656.74

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