Cafe Coffee Anyone ! ? ~ Successful IPO at Rs 328 ~ Awaiting Listing

I’m sure most of us have had a Coffee at one of the Chain Outlets of Cafe Coffee Day (CCD)

It’s parent Company Coffee Day Enterprises Ltd (CDEL) just concluded a successful IPO and fixed the IPO price at the upper band of Rs 328

Most had recommended to avoid the Issue as the Pricing was very High

I  hold a contrary opinion and had recommended the Issue but not as a Stag as there does exist the risk of listing gains not being available

Here are some relevant extracts from the IPO note prepared by us

 

Subscribe but not as a Stag ~You Need Not Sit Out !

Sitting Outside a Cafe Coffee Day Outlet

Further Lowering of Debt will significantly transform the Financials Dynamics ~ Low Floating Stock ~ It’s Not an Offer For Sale ~ 16.73 % Equity Stake in listed Mindtree worth @ Rs 2000 crs currently
Immediate Risk : Listing Gains may not be available as IPO Pricing is perceived to be on the higher side

Five Positives in our View

1. Huge Brand Recall & therefore Significant Brand Value ~ CDEL,through its subsidiary, operates the popular Cafe Coffee Day Chain of 1538 stores across 219 cities with a 46% Market Share.It has been recognised as the second best Indian Brand.This Intangible Asset is not in the Books but clearly is in the Premium sought in the IPO Pricing of Rs 316 to Rs 328

2. CDEL has a 16.73 % (10.41 % directly and 6.32% through 88.97% owned subsidiary Coffee Day Trading Ltd) Non Promoter Equity Stake in the listed Software Company Mindtree which is worth @ Rs 2000 crs based on Share Price of Mindtree ~ if monetised it will make CDEL free of net debt instantly and add Rs 250 crs + to bottomline on interest saved=> that’s an incremental EPS of Rs 12 itself !.CDEL had a net consolidated debt of Rs 2864 crs at December 31,2014. Mindtree quoted @ Rs 1400 (FV Rs 10) with a Market Cap @ Rs 12000 crs has just declared a very good Q 2 FY 16 with a Networth as on September 30,2015 of Rs 2243 crs and Book of Rs 267 and Annualised EPS of Rs 70 giving a PBV & PE of 5.25 and 20 respectively.It has also declared a 40% Interim Dividend. Share Price of Mindtree has gained @ 20% thus far in 2015 and holds potential for more

3. The CDEL IPO of Rs 1150 crs is a full fresh issue of Equity Shares and there is no offer of sale from Promoters and other Shareholders.Have a look below at the Pedigree of Non Promoter Shareholders and their pre IPO holdings and cost in CDEL

4. The IPO of Rs 1150 crs has already attracted 17 well known Anchor Investors who have committed Rs 334 crs at Rs 322

5. The IPO comprises just over 17% of post IPO Equity Capital of Rs 206 crs and implies limited floating stock read more

SS 1 Select Snowman Logistics lists brilliantly and remains locked at Rs 78.75 ~Advice to Book Profit

Had recommended Snowman Logistics as below in the SCRIP SCAN Module on our website

SS 1 Select ~ IPO of Snowman Logistics Rs 44-Rs 47 :Must Subscribe ~ 26-Aug-2014

It was heavily oversubscribed 59.75 times and allotment has been poor….However those who leveraged,which is the key reason for this high level of oversubscription, and applied as High Net Worth Applications too have come out making a good net profit after interest cost

It listed  brilliantly on Friday,September 12,2014 even better than expected and remained locked at Rs 78.75 on BSE

We have now advised Allottees to start offloading and book profit rather than buy more or Hold

Extracts from our advisory post as linked above

“We have designated this IPO as a SS 1 Select signalling a ‘Must Subscribe’ for immediate Strong Gains on Listing as well as in the Medium to Longer Term 

The Planned Expansion should enable a topline of @ Rs 200 crs in the next two years and if operating margins of 24% sustain the bottom line should cross Rs 50 crs…in fact with loan pay off from IPO Proceeds there should be marginal interest charge if any and the bottomline will get pumped even better…assuming a bottomline of Rs 60 crs in the next two to three years post expansion the EPS will be over Rs 3 and this at a PE of 20 and 30 gives an indicative Price of Rs 60 & Rs 90 respectively

FY 14 saw Topline Sales of Rs 153+ crs and a Bottomline of Rs 22.48 crs giving an EPS of Rs 1.35 on Post IPO Issue Equity of @ Rs 166 crs and thus pricing the IPO at high PE of 32+ at the lower end price band of Rs 44….yet this premium pricing is justified by the growth potential going forward…non linear to some extent

……. should be heavily oversubscribed and therefore allotment may be poor…Price on listing in September is expected to be Rs 65+…The IPO Pricing Band is at very high PE Multiples of 32 + itself and this races away to @ 50 if Listing does take place at Rs 65+….High Growth Potential does justify this Premium Pricing to some extent

This IPO is a Fresh Issue of Shares and not an Offer For Sale in part as none of the current Major Shareholders are selling in the IPO…that’s a a strong measure of confidence reposed by them in the Company’s prospects  

The Company has raised Rs 44.4 crs through three Anchor Investors,IDFC,ICICI Prudential and Faering Capital who have been allotted an aggregate of 9.45 million shares at Rs 47 per share

Interesting to note that the lead Managers are HDFC Bank and one of the Anchor Investors,Faering Capital has been promoted by Aditya Parekh,the son of Financial Doyen Deepak Parekh…Faering Capital and HDFC Bank incidentally are also significant private equity investors in Ratnakar Bank that is also planning an IPO this Financial Year  “ read more

Three Hot Favourites of Three Private Leading Connected Investors & Share Brokers~all @ Rs 100 ~ Transport Corporation ~TV Today ~ Delta Corp

Three Hot Favourites of Three Private Leading Investors and Share Brokers all connected to each other ~ all @ Rs 100  ~ Would you bet on any !?  

Transport Corporation ~ @ Rs 100 ~ Radhakishan Damani  (RK) bets big on it 

On December 31,2013 in a Bulk Deal on NSE,R K Damani Group’s Derive Investments picked @ 3.5% stake => 2548900 shares at Rs 78 to inspire the surge in the Price to reach a high of Rs 109.90 on BSE on 13/1/2014….It was at a 52 Week Low just four months earlier of just Rs 44 on 3/9/2013 

The company has declared an Interim Dividend just last week

We covered it on January 4,2014 on our SCRIP WATCH Module on www.jsalphaa.com as linked below 

TCI @ Rs 96~Radhakishan Damani bets on it 

 TV Today ~ Rs 100 ~ A Favourite of Ramesh Damani

This is promoted by the Living Media Group led by Aroon Purie.Living Media India holds 57.11% of the Equity while Aroon Purie holds 0.35%

This is a favourite of another Damani ~Ramesh Damani (RD) ~ Radhakishan Damani (RK)’s company and he hold collectively a 2.89% equity stake ~ Reliance Capital holds a huge 12.58% stake 

The Share Price had corrected from a recent 52 Week High of Rs 129 on the BSE on 8/1/2014…A 52 Week Low of Rs 53.40 was registered on 30/7/2013

Q3 FY 14 Results are on February 11,2014

We have just covered it today,February 5,2014 on our SCRIP WATCH Module on www.jsalphaa.com as linked below 

TV Today Network @ Rs 100~Is the Correction from a High of Rs 129 inside a month now over?

Delta Corp ~ Rs 100 ~ Rakesh Jhunjhunwala is riding on it too

Led aggressively by Jaydev Mody,even leading Iconic Investor ,Rakesh & wife Rekha Jhunjhunwala hold 6.82% equity stake => 1.55 million shares…a few leading FIIs and Indian Institutions too are major stakeholders

Jaydev Mody and Rakesh Jhunjhunwala jointly own Horses too ~ one of them ‘Jeremiah’ ran the Indian Derby last Sunday ! ~ Jaydev also had another horse ‘Falcon’ in the race ~ both did not win ~ they should have named their Horses Delta 1 & 2 ! 

The Company is excited about their new Daman Hospitality Property that will open soon first as a Hotel and then offer Gambling Facilities too ~ they see it as a game changer with exponential growth in the years ahead

The Share Price saw a 52 week high of Rs 107.70 on BSE on 7/1/2014 and a low of just Rs 38.95 on 22/3/2013   

We covered it on December 24,2013 on our SCRIP WATCH Module on www.jsalphaa.com as linked below 

Delta Corp at Rs 107 ~ New Casino, New Gamble and New High Price read more

Arshiya International drops violently another 20% today to Rs 77.95 on BSE ! ~ Krishan you owe me a Dinner at least !

Arshiya International drops violently another 20% today to Rs 77.95 on BSE ! ~ Krishan you owe me a Dinner at least ! 

Had warned you a few days ago that was not comfortable at Rs 125

On the Blog : Krishan this one is for you ~ Arshiya International at Rs 125

On the Website www.jsalphaa.com :

under Scrip Watch :

Arshiya International @ Rs 125 ~ Ambitious but Low ROCE of 10% does not inspire ~ 04-Jan-2013
Arshiya on 20% lower circuit at Rs 97 ! ~ warned just few days ago ! ~ 09-Jan-2013

 

under Scrip Tease :

Arshiya International Free Falls another 20% to Rs 77.95 ! ~ 10-Jan-2013

 

SEBI & the Exchanges needs to investigate ~ They cannot and should not accept Company Clarification at face value !

Krishan this one is for you ~ Arshiya International at Rs 125

Krishan this one is for you ~ Arshiya International at Rs 125

Have put it on Scrip Watch on our website www.jsalphaa.com ~ Check it out

I’m having some difficulty in accepting that Arshiya with a networth of @ Rs 550 crs and ROCE of @ 10% and a Market Cap of under Rs 800 crs  and a relatively high Debt Equity is executing Warehousing Projects of  Thousands of Crs

It has just recently amalgamated both it’s wholly owned subsidiaries into itself

52 Week High/Low is Rs 171 and Rs 111 and so is available towards it’s Lows

My Network tells me it is being hyped up by a few known punters,one of them who sits in Singapore and is irritatingly loud and over assertive at times as if except for him ,all of us are fools !

Kept it on Scrip Watch

Blog Viewer Queries and my responses…..Birla Power Solutions at Rs 1….Tulsyan NEC at Rs 46…..Marg at Rs 90+,Sanghvi Movers at Rs 110+,NIIT Tech at Rs 180+….Sabero Organics at Rs 97 +……Deccan Gold at Rs 20+…Garnet Constructions at Rs 12

Blog Viewer Queries

  • Birla Power at Rs 1
  • Tulsyan NEC at Rs 46
  • Marg at Rs 90+
  • Sanghvi Movers at Rs 110+
  • NIIT Tech at Rs 180+ 
  • Sabero Organics at Rs 97 +
  • Added later…..Deccan Gold at Rs 20+
  • Added later…Garnet Constructions at Rs 12

Thought I would give my brief observations on all of the above queries from blog viewers…..am reproducing both viewers queries and my brief responses  as this seperate blog post for wider and easy viewing

BIRLA POWER SOLUTIONS AT RS 1

BSReddy Says:

May 29th, 2011 at 7:34 pm 

Dear Sir ,
What about Birla Power Solution Ltd ,which is near Rs 1 /

 Gaurav Parikh Says:
May 29th, 2011 at 9:55 pm

Hi B R Reddy…thanks for your response…this specific blog post listed ten scrips between 20 and 30 and what you think they would be in 2012 if sensex is between 20k and 30k….A few years ago I had cautioned on Birla Power Solutions….I had a quick relook at it at par Rs 1 as this is the FV too …..Volumes are currently 15 lakh shares though average six month daily volumes are 75000 shares…. 52 week high/low is Rs 2/Rs 1…but margins and profits are very low…profits are in a few crs though sales crossed Rs 230 crs last year and will have crossed Rs 250 crs for FY 2011…amusingly it declared a 1:5 Bonus last year as well as a dividend of 7.5%…it carries debt of over Rs 100 crs while funds tied up in Debtors and Inventories last year aggregated over Rs 175 crs..Sales were Rs 238 crs….currently manufacturing portable gensets and engines for gensets it now plans to enter the field of power generation through two subs Birla Energy Infra Ltd and Birla Urja Ltd…it needs funds…has constantly….has raised Authorised Capital to Rs 425 crs….With Profitability in single digit Rs crs and Equity at Rs 215 crs,don’t expect any dividend for FY 11 that just passed….if they do foolishly declare one,they will have to dive into GDR proceeds of earlier years to distribute,if any are yet available….while I feel the downside is 75 paise,any uptick from here will be more on momentum,hype,sentiment and anticipation and blind faith in a Birla Company rather than on fundamentals…Yash Birla Group companies do not command much respect or premium on the bourses or in business…another of his group companies is Birla Shloka ….it is just Rs 15…it has a 52 week high of Rs 94 and the FPO in Jan 2010 was at Rs 50 for a FV Rs 10 share….if you wish to make monies in Birla Power, don’t depend on fundamentals to support upmoves from Rs 1….more likely on collective hype and hope…Cheers !

TULSYAN NEC AT RS 46-RS 49

AMIT GUPTA Says:
May 30th, 2011 at 3:50 pm  

whats your view on tulsyan NEC

Gaurav Parikh Says:
May 31st, 2011 at 12:05 pm 

Amit……Tulsyan NEC suffered from a very high Debt…over Rs 220 crs last year from a Total Capital Employed of Rs @Rs 285 crs…recent 2:1 Rights Issue at Rs 49.50 will triple Equity to Rs 15 crs and move Networth to Rs 120 crs…this will reduce Debt Equity towards 2:1…..Consolidated Turnover is Rs 876 crs for FY 11 but bottomline is a mere Rs 9 crs because of the high Interest outflow of over Rs 32 crs…they also faced huge Power cuts…40% in FY 10…affected capacity utilisation…they also faced some price hurdle to source sponge iron….they have since bought out a 35000 MT Sponge Iron Manufacturer Chitrakoot and are setting up a 35KV Thermal Power Station…Steel sales account for near Rs 700 crs of the turnover…rest is poly packaging synthetic division sales…it is a dividend paying company…65% + equity is held by the Promoters….I see little downside from here….Trading Volumes are low….would keep it as a ScripWatch rather than ScripSelect right now…Interestingly Market Cap is only @ Rs 70 crs on enhanced capital with share price in the mid Rs 40s levels…it remains a small company in this sense…sold 1.5 lakh ton of Steel and @ 12000 t on Packaging…has over 1500 employees …..will get re-rated only when Debt levels drop significantly to Rs 100-Rs 150 crs range and therefore Debt/Equity to 1:1….Keep a watch …..Cheers read more