Cafe Coffee Day parent to open IPO next week

The company, which is selling new shares in the IPO, will dilute as much as 17.55 per cent on a post-issue basis to raise up to Rs1,150 crore, according to a presentation made at a company news conference on Wednesday.

The minimum bid lot is 45 equity shares and in multiples of 45 shares therein. The company will use the issue proceeds to fund coffee related business, setting up of new cafe outlets and repayment of loans, among others. Part of the money will also be used in the manufacturing and assembling of vending machines.

Asked on whether the company would look at shutting a few of its outlets, Siddhartha said going forward, the company will close only a small percentage of its stores.

In addition to having the largest chain of cafes in India, it operates a fully-integrated coffee business ranging from procuring, processing and roasting of coffee beans to retailing of coffee products across various formats.

He said the café footprint was almost four times larger than the cumulative footprint of its next four competitors.

Café Coffee Day is targeted at the value-conscious youth segment, while The Lounge focuses on the trendy and affluent customers with higher disposable income.

Given the average target price of Rs 1,890, the stock is seen giving an upside potential of 20 per cent. In September, while Indian brokerage firm Nirmal Bang had upgraded its rating on the stock to “buy” from “accumalate”, Geojit BNP Paribas had revised its target price upwards by 13 per cent to Rs 1,920.

It also owns about 16 per cent of software services exporter MindTree Ltd and about 53 per cent in Sical Logistics Ltd.

Of the total issue size of Rs 1150 crore, equity shares aggregating to Rs 150 million has been reserved for subscription by eligible employees of the company.