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IPO REPORT
RECOMMENDATION - AVOID
ISSUE HIGHLIGHTS
ISSUE BREAK UP
Issue Opens On
Issue Closes On
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
Promoter Holding %
Pre Issue Promoter Holding %
63.34%
Rs 1150 Crore
Rs 15 Crore
3.51 Cr Eq Shares
3.64 Cr Eq Shares
Therefore
QIB Category
Retail category
Eq Sh Pre Issue
17.09 Cr Eq Shares
20.60 Cr Eq Shares
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.
www.hemonline.com
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
Vending Business
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.
www.hemonline.com
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.
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
www.hemonline.com
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
Hem Research
www.hemonline.com
www.hemonline.com
research@hemonline.com
MUMBAI OFFICE: 14/15, KHATAU BLDG., IST FLOOR, 40, BANK STREET, FORT, MUMBAI-400001
PHONE- 0091 22 2267 1000
JAIPUR OFFICE:
GROUP COMPANIES
HEM FINLEASE PRIVATE LIMITED
MEMBER-NSE
Hem Research
www.hemonline.com
Disclaimer & Disclosure: This document is prepared for our clients only, on the basis of publicly available information
and other sources believed to be reliable. Whilst we are not soliciting any action based on this information, all care
has been taken to ensure that the facts are accurate, fair and reasonable. This information is not intended as an offer
or solicitation for the purchase or sell of any financial instrument and at any point should not be considered as an
investment advice. Reader is requested to rely on his own decision and may take independent professional advice
before investing. Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited,
Directors and any of its employees shall not be responsible for the content. The person accessing this information
specifically agrees to exempt Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt.
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the person accessing this information due to any errors and delays. The companies and its affiliates, officers, directors,
and employees, including persons involved in the preparation or issuance of this material may from time to time, have
long or short positions in, and buy or sell the securities there of, company (ies) mentioned herein and the same have
acted upon or used the information prior to, or immediately following the publication.
No
No
No
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.
Hem Research