Coffee Day Enterprises Limited - IPO Note
Rishi Chourasia
Please find attached IPO Note of “Coffee Day Enterprises Ltd”.
Issue Details
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Coffee Day Enterprises Limited |
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Issue Period |
Issue Opens On*: Wednesday, October 14, 2015 Issue Closes On : Friday, October 16, 2015 *The Anchor Investor Bidding Date shall be one Working Day prior to the Bid/ Issue Opening date. |
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Price Band |
Rs. 316 - 328 |
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Bid Lot |
45 Equity Shares and multiple thereof |
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Issue Size |
Rs.1,150 Crores |
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Employee Reservation |
Rs. 15 Crores |
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Lead Manager |
Axis Capital, Kotak Mahindra Capital Co., Citigroup Global Markets, Morgan Stanley, Edelweiss Financial Services, Yes Bank |
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Registrar |
Link Intime India Pvt. Ltd. |
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Issue Structure |
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Issue |
Fresh Issue for Rs.1,150 Crores |
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QIB* |
50% of Net Issue ( 1.73~ - 1.80^ Crores Shares) |
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NIB |
15% of Net Issue ( 0.52~ - 0.54^ Crores Shares) |
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Retail |
35% of Net Issue ( 1.21~ - 1.25^ Crores Shares) |
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* Company may allocate up to 60% Shares of the QIB Portion to Anchor Investors. |
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~ Upper Price Band, ^ Lower Price Band |
Issue Highlights
· Coffee Day Enterprises Limited (“CDEL”) is the parent company of the Coffee Day Group, which houses Café Coffee Day that pioneered the coffee culture in the chained café segment in India.
· CDEL has established the largest footprint of café outlets in India, with a network of 1,538 café outlets spread across 219 cities including under the established and recognized brand name “Café Coffee Day” (popularly referred to as “CCD”), as of June 30, 2015. In terms of the number of chained café outlets, CDEL has a market share of approximately 46% in India as on December 31, 2014.
· CDEL is also in non-coffee businesses viz. Technology Parks, Logistics, Financial Services, Hospitality and has investment in IT-ITES and other technology companies such as Mindtree (16.75% equity holding as of June 30, 2015). CDEL utilize a low risk, built-to-suit model in their development of IT-ITES technology parks, Global Village and Tech Bay.
· The shares will be listed on BSE and NSE.
Background – Company & Promoters
Coffee Day Enterprises Ltd (“CDEL”) was originally formed as a partnership firm on February 1, 2008 under the name Coffeeday Holding company and thereafter converted from a partnership firm to a private limited company as Coffee Day Holdings Company Private Limited on June 20, 2008. The name of the company was changed to Coffee Day Resorts Private Limited on January 25, 2010. Subsequently, the name of the company was changed to Coffee Day Enterprises Private Limited on August 6, 2014. The Company was converted into a public limited company on January 17, 2015 and the name of the company was changed to Coffee Day Enterprises Limited.
Sical Logistics Ltd –the subsidiary of the CDEL is already listed on BSE and NSE. The other subsidiary, Way2Wealth Securities Pvt. Ltd.(“W2W Securities”), in which it hold a 85.53% equity holding, is a retail focused investment advisory company.
Shri V. G. Siddhartha the Chairman and Managing Director of the Company has a long association with coffee, given the family’s interests in coffee plantations in Southern India for more than 130 years. Shri V. G. Siddhartha has an experience of approximately 22 years in the coffee business. He was recognized as “The Entrepreneur of the Year” by Economic Times in September 2003. In 2014, he was awarded with ‘ET Retail Hall of Fame’ for his contribution to the growth in retail sector.
Business Overview
Coffee Day Enterprises Ltd (“CDEL”) is the parent company of the Coffee Day Group, which houses Café Coffee Day that pioneered the coffee culture in the chained café segment in India. CDEL opened their first Café Coffee Day outlet in Bengaluru in 1996 and have established the largest footprint of café outlets in India, with a network of 1,538 café outlets spread across 219 cities, including under the established and recognized brand name “Café Coffee Day” (popularly referred to as “CCD”), as of June 30, 2015. In terms of the number of chained café outlets, CDEL has a market share of approximately 46% in India as of December 31, 2014. The brand Café Coffee Day ranked second in the Most Trusted Brands in the food service retail category in India, and was one of the only four indigenous Indian brands to be recognized as the Most Exciting Indian Brand in India in 2014.
COFFEE BUSINESS
CDEL has engaged in the coffee business and coffee trading business. In addition to having the largest chain of cafés in India, CDEL 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 formats of coffee businesses CDEL operated as of June 30, 2015:
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Format |
Branding |
Offering |
Target Segment |
Footprint |
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C
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Caffe Coffee Day outlet |
Café Coffee Day |
A mixer of coffees, teas and other beverages and food options |
Value-conscious youth segment |
1,489 outlets across 219 cities in India and 14 international outlets across Austria, Czech Republic and Malaysia |
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Caffe Coffee Day The Lounge outlet |
The Lounge |
A mix of exotic coffees, teas, cocktails, and international cuisines options |
Trendy and affluent customers with a higher disposable income |
42 outlets across seven cities in India |
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Caffe Coffee Day The Square outlet |
The Square |
specialty coffees and teas and fine dining options |
Coffee connoisseurs who seek the theatre of coffee |
7 outlets across four cities in India |
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I n H o me
O u T o f H ome |
Vending business |
Coffee Day Beverages |
a variety of coffees and teas; coffee is freshly brewed |
Corporate and Institutional clients |
30,916 vending machines across India |
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Fresh & Ground outlet |
Coffee Day Fresh & Ground |
22 exclusive varieties of freshly brewed coffee powder |
Residential households consumption and a large number of restaurants and eateries across South India |
561 outlets across seven states in India |
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Coffee Day Xpress kiosks |
Coffee Day Xpress |
basic offerings of coffees and teas and light snack options |
Caters to ‘Coffee on-the-go’ consumers |
590 kiosks across 12 cities in India |
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Production, Processing & Exports |
Coffee Day Exports |
green coffee beans |
Large roaster and coffee traders |
One of the largest exporters of Indian coffee beans, primarily to Europe, Japan and the Middle East |
NON COFFEE BUSINESSES
In addition to the coffee business, CDEL operate other select businesses namely, development of IT- ITES technology parks, logistics, financial services, hospitality and IT-ITES.
Technology Parks
Company’s wholly-owned subsidiary, Tanglin Development Ltd (“TDL”), is engaged in the development and management of technology parks and related infrastructure, offering bespoke infrastructure facilities for ITITES enterprises. As of
June 30, 2015, TDL had two technology parks, namely Global Village situated in Bengaluru, Karnataka and Tech Bay situated in Mangaluru, Karnataka.
Logistics
Company’s subsidiary, Sical Logistics Ltd (“SLL”), in which CDEL hold a 52.83% equity holding, is one of the leading integrated logistics solution providers in India with over five decades of experience. SLL is listed on the BSE and NSE.
Financial Services
CDEL’s subsidiary, Way2Wealth Securities Pvt. Ltd. (“W2W Securities”), in which CDEL hold a 85.53% equity holding, is a retail focused investment advisory company which provides wealth management, broking, portfolio management and investment advisory services.
Hospitality
CDEL own and operate three luxury boutique resorts (one directly through CDEL, and two through their wholly-owned subsidiary, Coffee Day Hotels & Resorts Pvt. Ltd.(“CDHRPL”), under the brand The Serai. Their resorts are located in the State of Karnataka at Chikkmagaluru, Bandipur and Kabini. In addition, CDEL also hold a minority interest in and manage a luxury resort located in Andaman and Nicobar Islands.
Investments
CDEL also has investments in certain IT-ITES and other technology companies such as Mindtree in which CDEL own a 16.75% equity holding as on June 30, 2015 and in which company promoter, Shri V.G. Siddhartha additionally owns 3.01%. Mindtree is listed on the BSE and NSE. CDEL’s other investee companies include Ittiam, Magnasoft and Global Edge.
Brief Consolidated Financial Details (Rs. In Crs)
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Particulars |
Apr-Jun’15 (03) |
For Year Ended 31st March |
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2015 |
2014 |
2013 |
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Equity Share Capital |
116.73 |
14.59 |
14.25 |
14.25 |
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Reserves |
338.07 |
516.09 |
540.11 |
633.91 |
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Networth |
456.16 |
532.32 |
555.99 |
649.80 |
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Revenue from Operations |
623.06 |
2479.36 |
2287.01 |
2099.56 |
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Revenue Growth (%) |
- |
8.65% |
8.88% |
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EBITDA |
102.23 |
375.17 |
319.08 |
299.65 |
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EBITDA Margin (%) |
16.41% |
15.13% |
13.98% |
14.30% |
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Profit Before Tax |
(35.96) |
(147.20) |
(141.59) |
(63.79) |
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Net Profit |
(20.05) |
(87.24) |
(77.03) |
(21.41) |
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(Source: RHP)
For additional information & risk factors please refer to the Red Herring Prospectus
