Page 2 of 22
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
Page 5 of 22
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
The Square
XPRESS Outlets
590
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%
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)
(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)
(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
Manufacturing expense
General and Administrative expense
=
=
Page 11 of 22
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
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
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
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
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
(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
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 - 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
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
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
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)
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
219
80
256
295
(413)
-
791
195
267
264
65
-
879
303
278
233
65
-
989
419
293
202
74
-
(164)
0.06
(164)
(153)
0.08
(154)
(234)
0.03
(234)
(257)
0.02
(257)
(140)
0.11
(140)
(147)
0.12
(147)
(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
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
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
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)
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.
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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
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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
25.86
2. Bombay Burmah
3. Tata Coffee
4. CCL Products
13.75
15.51
27.56
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
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
Valuation Valuation
7 Times
10 times
Rs. Crore
783
783
EV/EBIDTA multiple
EV
x
Rs. Crore
8
6,266
10
7,833
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
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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