The weak debut of Coffee Day Enterprises, who are the owners of often used name Café Coffee Day where a lot happens over coffee entered into the NSE and BSE listing with a weak debut. It made a weak debut on the bourses on Monday, as the shares got listed at Rs 313 on BSE, a 4.6 per cent discount to the issue price of Rs 328. It seems quite a low in the share prices on the very first day.
It is the biggest in over three years issue which is of Rs 1,150 crore, had been subscribed 1.82 times amid good response from qualified institutional buyers (QIBs). Though it entered with little enthusiasm in retail participation. According to analysts’ views the company’s valuation to be a bit stretched and the IPO was thought to be good only for long-term investors.
Well, stock markets takes a lot of peaks and lows, but on the initial day of CCD issue, it was bit startling to see the scrip fell 14.4 percent to hit a low of Rs 280.70 on BSE before recovering some of the lost ground. At 10.15 am, the stock was trading at Rs 295, down 10 per cent over its issue price, on BSE.
The company has high contenders in the market with TATA franchise US based Starbucks, Barista, Costa Coffee to name a few. Apparently, the coffee IPO is simply to extend the finance boundaries and gain more from the market, repay and pre-pay loans of the parent firm and subsidiaries and general corporate needs.
Ahead of the IPO, the company had raised over Rs 334 crore from anchor investors – BlackRock India, ICICI Prudential, Reliance Life Insurance Company, Merrill Lynch Capital and Swiss Finance Corporation.
The enterprises have already mobilized Rs 100 crore in the initial round of pre-IPO funding by Nandan Nilekani and Rakesh Jhunjhunwala, among others in March.
On consolidated basis, the company incurred a net loss of Rs 77 crore in FY15, up from Rs 21.40 crore in year-ago period. In the nine-month period ending December 2014, the company had a loss of Rs 75.2 crore.
Apart from the Café Coffee Day chain, the holding company makes way in other businesses like development of IT-ITES technology parks (Tanglin Development Limited), logistics (Sical Logistics), financial services (Way2Wealth Services), hospitality (Coffee Day Hotels & Resorts Private Ltd) and investments in companies like Mind Tree
