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BROKING | DEPOSITORY | DISTRIBUTION | FINANCIAL ADVISORY

IPO REPORT

COFFEE DAY ENTERPRISES LTD

RECOMMENDATION - AVOID
ISSUE HIGHLIGHTS

ISSUE BREAK UP

Issue Opens On

14th Oct 2015

Issue Closes On

16th Oct 2015

Of Which

Price Band

Rs 316-328/ Share

Employee Reservation

Bid Lot

45 Equity Shares

Accordingly

Face Value

Rs 10 Per Share

Listing

BSE, NSE

Registrar
BRLM

Issue Size

Link Intime India (P) Ltd

Kotak Mahindra Ltd,
Citigroup Global Markets India Pvt Ltd
Morgan Stanley India Co Pvt Ltd
Axis Capital Ltd
Edelweiss Financial Services Ltd
Yes bank Ltd

Promoter Holding %
Pre Issue Promoter Holding %

63.34%

Rs 1150 Crore

Rs 15 Crore

Issue Size @ Cap Price

3.51 Cr Eq Shares

Issue Size @ Floor Price

3.64 Cr Eq Shares

Therefore
QIB Category

50% of Issue Size

Non Institutional Category

15% of Issue Size

Retail category

35% of Issue Size

Eq Sh Pre Issue

17.09 Cr Eq Shares

Eq Sh Post Issue @ Cap Price

20.60 Cr Eq Shares

Eq Sh Post Issue @ Floor Price

20.73 Cr Eq Shares

VALUATION
The Company is bringing the issue at price band of Rs 316-328/Share at p/b ratio of approx 3.92-4.07 on post issue book
value of approx Rs 80.53 per share. Though the company has strong promoter background, brand name , pan India presence
but looking after the valuations issue looks steeply priced at present level. Also the company has posted consecutive losses
from last few years which doesnt instill confidence for investment in short term ,however in long term investment is
advisable only when company will start posting profits. Hence we recommend Avoid on issue.

Research Analyst : Astha Jain

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BUSINESS OVERVIEW
The company is parent company of Coffee Day Group which houses Caf Coffee Day that pioneered the coffee culture in chained caf
segment in India. Companys brand Caf Coffee Day ranked second in the Most Trusted Brands in the food service retail category in
India .Company have network of 1538 caf outlets spread across 219 cities, including under the established and recognized brand
name Caf Coffee Day (popularly referred to as CCD).
Cos Business

Coffee

Non Coffee

Technology Parks

Financial Services

Logistics

Hospitality

Investments

Below is a description of the formats of coffee businesses operated as of June 30, 2015:
Cafe Coffee day Outlet

1489 Outlets across 219 cities & 14 International Outlets across Austria, Czech Republic & Malaysia

Cafe Coffee day The Lounge Outlet

42 outlets across seven cities in India

Cafe Coffee day The Square Outlet

Seven outlets across four cities in India

Vending Business

30916 vending machines across India

Fresh & Ground Outlet

412 outlets across seven states in India

Coffee Day Xpress Kiosks

561 Kiosks across 12 cities in India

Production Processing & Exports

One of the largest exporters of Indian coffee beans, primarily to Europe ,Japan & Middle East

OBJECTS OF ISSUE
The objects of the Net Proceeds of the Issue are:

Financing cos coffee businesses operated through its Subsidiary, Coffee Day Global Limited (CDGL)

Setting-up of new Caf Network outlets and Coffee Day Xpress kiosks;

Manufacturing and assembling of vending machines;

Refurbishment of existing Caf Network outlets and vending machines; and

Setting-up of a new coffee roasting plant facility, along with integrated coffee packing facility and tea packing
facility.

Repayment or prepayment of loans of company and Subsidiary; and

General corporate purposes

Hem Research

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COMPANYS STRENGTHS

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 : Co have the
largest footprint of cafs through its Caf Network, with 1,538 outlets spread across 219 cities in India as of June 30, 2015.
Co had a market share of approximately 46% in terms of the number of chained caf outlets, as of December 31, 2014
(source: Technopak, March 2015). Cos caf footprint is nearly four times larger than the cumulative footprint of the next
four competitors, as of December 31, 2014 (source: Technopak, March 2015). Company have a significant pan-India
presence through its Caf Coffee Day outlets. In addition, company had 561 Coffee Day Xpress kiosks across 12 cities and
412 F&G outlets across five states in India,as of June 30, 2015. Company also had 30,916 vending machines as of June 30,
2015 which serve its corporate and institutional clients all over India.

Highly scalable platform for growth driven by deep operational expertise

Cos Average Sales/Day/Caf (ASPD) per outlet has been increasing in each of the Financial Years 2013, 2014 and 2015,
and the three month period ended June 30, 2015. The following table sets forth cos ASPD per caf for the periods indicated:
(in Rs)
Particulars
FY13
FY14
FY15
3MFY15
Avg Sales/day/cafe
Cafe Outlets
10,720
11,927
13,198
13,387
Cos ASPD per caf grew by 11.26% from Financial Years 2013 to 2014, by 10.66% from Financial Years 2014 to 2015 and
by 1.43% in the three month period ended June 30, 2015.
Same Store Sales Growth (SSSG) has also witnessed an increasing trend in the past. The following table sets forth the
SSSG per caf for the periods indicated
(in %)
Particulars
FY13
FY14
FY15
3MFY15
Same store sales growth
Cafe Outlets
8.39%
9.13%
3.06%
6.40%

RISK FACTORS

Company incurred losses in Financial Years 2013, 2014 and 2015, and the three month period ended June 30,
2015, which may adversely affect cos business and financial performance.: Company incurred losses on a
consolidated basis for the Financial Years 2013, 2014 and 2015, and the three month period ended June 30, 2015 of Rs
214.05 million, Rs 770.28 million, Rs 872.35 million and Rs 200.45 million, respectively.

Cos consolidated net indebtedness and its failure to comply with certain restrictive covenants under cos loan
agreements could adversely affect its financial condition and results of operations: As of June 30, 2015, cos
consolidated net indebtedness totaled Rs 27,622.47 million (total debt in accordance with the restated consolidated
financials less convertible debentures, less loans from related parties and cash and bank balance including fixed deposit
and margin money deposit with bank). Hence heavy debt on books will lead to adverse financial performance.

Hem Research

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FINANCIAL STATEMENTS
Consolidated Financial Statement
Particulars

Rs Crore

FY12

FY13

FY14

FY15

Q1FY15

Total Revenue

1565.28

2099.56

2287.01

2479.36

623.06

Total Expenses

1376.04
189.24

1799.91
299.65

1968.03
318.98

2104.18
375.18

520.839
102.23

12.09
68.59

14.27
49.58

13.95
65.76

15.13
69.36

16.41
11.91

147.16

202.64

248.54

265.50

66.73

110.67
123.46
-12.79
4.78
-17.58
-2.69
-20.27
39.57
19.30
1.23
14.07
1.36
0.00
602.32
617.75
1.41
13.71
438.96
3.12
3.46
4.18

146.59
210.37
-63.79
10.11
-73.89
-7.36
-81.25
59.84
-21.41
-1.02
14.24
1.36
0.28
633.91
649.80
1.42
-15.03
456.19
-3.29
4.19
4.38

136.20
277.79
-141.59
-3.49
-138.10
-13.71
-151.81
74.78
-77.03
-3.37
14.24
1.36
0.28
540.11
555.99
1.42
-54.08
390.33
-13.85
3.29
6.44

179.04
326.23
-147.20
12.28
-159.47
-18.08
-177.55
90.32
-87.23
-3.52
14.59
1.36
0.28
516.09
532.32
1.46
-59.80
364.90
-16.39
4.39
6.67

47.41
83.365
-35.96
4.401
-40.36
-2.197
-42.56
22.513
-20.05
-3.22
116.73
1.36
0.00
338.07
456.16
11.67
-1.72
39.08
-4.39
1.09
8.49

EBIDTA
EBIDTA Margin
Other Income
Depreciation
EBIT
Interest
PBT
Tax
PAT
Minority Interest
PAT
Sh of Profit in Asso
PAT
NPM
Equity Capital
Comp Conv Pref Capital
Non Conv Red Pref Capital
Reserves
Net Worth
Eq shares (Number)
EPS*
Book Value*
ROE %*
ROCE %*
Debt To Equity ratio

*: Calculated on respective years no of shares

Hem Research

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research@hemonline.com

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Disclosure of Interest Statement

1. Analyst Ownership of the Stocks

No

2. Hem & its Group Company Ownership of the Stock

No

3. Hem & its Group Company Director Ownership of the Stock

No

4. Broking relationship with Company covered

No

Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject
securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly
related to the specific recommendations and views expressed by research analyst(s) in this report.

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