8/30/2015

Caf Coffee Day Finally Files For Rs 1150Cr IPO; Valuation Pegged At Rs 6300Cr

Caf Coffee Day Finally Files For Rs 1150Cr IPO; Valuation

Pegged At Rs 6300Cr
Posted by: Mohul Ghosh

in Finance

June 27, 2015

1 Comment

Indias biggest chain of coffee outlets: Caf Coffee Day (CCD) has finally decided to go public. Against a rough
valuation of $1 billion or Rs 6300 crore; CCD plans to raise approximately $180 million or Rs 1150 crore by
selling their shares to general public.
We had reported last year about speculations of such an IPO, considering that CCD was in urgent need of
capital to reduce debt and for expansion and growth.
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8/30/2015

Caf Coffee Day Finally Files For Rs 1150Cr IPO; Valuation Pegged At Rs 6300Cr

CCD filed a draft red herring prospectus yesterday, wherein they have stated that Rs 632 crore from the
raised funds would be used to repay their loans and the rest of the amount would be used to open new
outlets and stores. During the next two years, CCD is planning to open 215 outlets and 105 kiosks.
Kotak Mahindra Capital, Citigroup Global Markets and Morgan Stanley were hired as global book running lead
managers and Cyril Amarchand Mangaldas was the legal counsel to the firm.
Started in 1996, Caf Coffee Day has now expanded to 1600+ outlets across 28 Indian states. Internationally,
they have presence via 16 outlets in Pakistan, Austria, the Czech Republic and Malaysia and UAE. As per the
filing, CCD has a debt of Rs 2864 crore as of December 31, 2014.
For the 9 month period ending on December, 2014, CCD had posted consolidated revenue of Rs 875 crore,
against a net loss of Rs 10.9 crore. VG Siddhartha, the main promoter of the company holds 54.78% stake in
the venture, while the rest of the stake is being held by various investors including Nandan Nilekani, co-founder
of Infosys.
As per inputs derived from various experts, there are three main problems which CCD needs to overcome for
more profits:
Compared to the Western countries, India coffee outlet customers prefer to spend hours inside the place.
In Western countries, the concept of takeaway is more prevalent, which increases the revenue. To counter this,
CCD needs more outlets and more kiosks.
Due to poor locations, CCD had to shut 300 outlets during the last three years. In the filing as well, they have
mentioned that they will close 20-30 outlets every year owning to low revenues. Hence, selection of the best
location is paramount for CCD in future.
Competition from Starbucks and Barista is threatening CCD. Starbucks, which is worlds biggest coffee
chain, have molded their Indian operations to serve tea and Indian snacks; and it seems that CCD will need to
reinvent themselves, if they wish to thwart the competition.
SEBI will require 2-3 months to approve this IPO filing; and once its done, the listing would be done within a
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Caf Coffee Day Finally Files For Rs 1150Cr IPO; Valuation Pegged At Rs 6300Cr

month.

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