Coffee Day Enterprises Ltd: Result Update

Coffee Day Enterprises Ltd (Rs.48.80) came out with excellent set of numbers for the September, 2022 quarter.

The net profit of the company came as Rs 5.67 crore in the quarter ended September 2022 as against net loss of Rs.84.85 crore during the previous quarter ended September 2021. 

The Sales rose 56.15% to Rs.229.16 crore in the quarter ended September 2022 as against Rs.146.76 crore during the previous quarter ended September 2021. The quarterly results are set to improve further as the Nationwide Lockdown were lifted across India. Photo: AndhraFriends.com.

Initial Public Offering: Coffee Day Enterprises Ltd came up with an IPO at a price band of Rs.316 to Rs.328 per share in October, 2015.

The CMP of the shares of the company is at a considerable discount to the IPO price. 

Business: Coffee Day' (CCD). Company owns a network of 550 - plus Cafe outlets spread across in India.

In addition to having one of the largest chain of cafes in India, company operate a highly optimized and vertically integrated coffee business which ranges from procuring, processing and roasting of coffee beans to retailing of coffee products across various formats. 

The Company is one of the largest exporters of Indian coffee beans, primarily to Europe, Japan and the Middle East.

According to Wikipedia: Café Coffee Day Global Limited Company is a Chikkamagaluru-based business which grows coffee in its own estates of 20,000 acres. This should be valued around Rs.2000 crores.

It is the largest producer of arabica beans in Asia, exporting to various countries including U.S., Europe, and Japan.

Now calculate the value of this property against the CMP of the shares of the company.

Tata Coffee currently has about 8,000 hectares of coffee plantation, most of it located in Toopran (Telangana) and Theni (Tamil Nadu).

Debt Reduction: The debt levels have reduced significantly from Rs.7,214 crore as on March 31, 2019 to Rs.1,898 crore as at the end of March 31, 2021 and to Rs.1,810 crore as at the end on March 31, 2022.

Meanwhile, Tata Consumer Products had withdrawn a proposal to purchase the vending machine business from Coffee Day Enterprises, about two years after the firm had started talks and begun evaluating a potential acquisition.

According to the market grapevine, the deal got cancelled because the management of Coffee Day Enterprises Ltd was demanding higher price than the previous one. 

Tata Consumer Products Ltd, which owns the Tetley Tea and Tata Salt brands, had earlier proposed to buy the coffee vending business from CGDL for at least Rs.1,000 crore.

This happened because of the turnaround of the company during the last one year.

Accumulate the shares of Coffee Day Enterprises Ltd (CCDL) near the CMP of Rs.48.80 for short term targets of Rs.57/61/72/85.