Coffee Day Enterprises Ltd: Buy

CMP: Rs.50.15

Targets: Rs.71/85

SL: Rs.47.

The meteoric rise of the Café Coffee Day brand remains one of India's greatest success stories of home-grown businesses.

The coffee beans used in Café Coffee Day outlets are grown on the company's own plantations.

Furthermore, the Café Coffee Day outlets stood out for their distinct colour schemes and custom-made furniture pieces, which gave them a distinct identity. 

Coffee Day Enterprises Ltd (CCD) is India's largest coffee chain and is owned by Coffee Day Global which is a subsidiary of Coffee Day Enterprises.

Café Coffee Day opened its first outlet in Bengaluru in 1996. By 2011, it had grown into a major business conglomerate with over 1000 locations across the country. 

Just before his early demise, VG Siddhartha owned 12,000 acres (4047 ha) of coffee plantations. A 2015 Forbes list pegged his net worth at $1.2 billion (Rs.8200 crore).

During the lockdown period, Malavika Hedge took over as CEO of the company, and the company's health began to improve. Photo: Manorama Online.

Aside from her trailblazing efforts to reduce the company's debt, she also had great success in the export of high-quality Arabica coffee beans. Her 20,000-acre coffee plantation's coffee beans are in high demand in many foreign countries.

Malavika Krishna, the daughter of former Karnataka Chief Minister SM Krishna, was born in 1969. She received her engineering degree from Bangalore University. She married VG Siddhartha in 1991 and has two sons, Eshaan and Amartya.

Triggers:

💥Post lifting down of nationwide lockdowns, the hotels, tourism and hospitality sector has received a new lease of life, with the increase in footfalls (in hotels, restaurants, shopping malls, etc). The trend has gained momentum during the last few weeks and will continue at least till this Deepavali, the festival of light. Photo: Retail4growth.com.

After that marriage season will pick up steam and this will continue till March - April next year. Then there is Christmas, Saarwswati Pooja, Makar Sankranti, Basanti Pooja, Baishakhi, and so on. The ongoing festival season is going to boost the bottomline of restaurants.

💥Meanwhile, the debt levels of Coffee Day Enterprises Ltd (CDEL) have reduced significantly from Rs.7,214 crore as of March 31, 2019 to Rs.1,898 crore, at the end of March 31, 2021 and to Rs.1,810 crore, at the end on March 31, 2022. The current debt of the company ~Rs.1500 crores.

💥Moreover, CDEL also informed that the amount of Rs.3,430.67 crore due by Mysore Amalgamated Coffee Estates Limited (MACEL), to various subsidiaries and a joint venture of the company is yet to be recovered. This money will further provide muscles to Coffee Day Enterprises Ltd.

💥CDEL's subsidiary, Coffee Day Global Ltd, owns and operates the popular coffee chain Café Coffee Day (CCD). 

It owns 495 cafes in 158 cities and 285 CCD Value Express kiosks. There are 38,810 vending machines that dispense coffee in corporate workplaces and hotels under the brand. This is a massive company. In the pre-pandemic FY 2019-20, the total number of cafes stood at 1,192.

💥It came up with an IPO of Rs.1,150 crore at an issue price of Rs.316 - 328 per equity share. The IPO opened for subscription on Oct 14 2015. The issue was subscribed 1.64 times.

💥The market cap of Coffee Day Enterprises Ltd is ₹1,067 Cr as of 12 October, 2022. In comparison, its FY21 - 22 income was Rs.6,578.80 million. 

💥In May last year there were media reports that a Tata Group firm, Tata Consumer Products, was in talks to acquire the CCD's coffee vending business, held through a subsidiary Coffee Day Global Ltd (CGDL) at a consideration of at least Rs.1, 000 crores.

💥According to https://munafasutra.com the targets of Coffee Day Enterprises Ltd, for this month are Rs.62.96 and Rs.84.86 on the upside, and Rs.46.54 on the downside.