Coffee Day IPO, worth long term investment: AnandRathi

Coffee Day Enterprises (CDEL) IPO review by AnandRathi SecuritiesCoffee Day Enterprise is the parent company of the Coffee Day Group, which houses Café Coffee Day that pioneered the coffee culture in the chained café segment in India. The company is engaged in the coffee business through its subsidiary, Coffee Day Global Limited (earlier known as Amalgamated Bean Coffee Trading Company Limited) (“CDGL”) and its subsidiaries. In addition to the coffee business, company operate other businesses that are aimed at leveraging India’s growth potential, namely, development of IT- ITES technology parks, logistics, financial services, hospitality and ITITES.Recommendations"Café coffee day enjoys market share of approximately 46% in India, with their café footprint being nearly four times larger than the cumulative footprint of the next four competitors, as of December 31, 2014. The brand Café Coffee Day is ranked second in the Most Trusted Brands in the food service retail category in India, and was one of the only four indigenous Indian brands to be recognized as the Most Exciting Indian Brand in India. In addition to their coffee business, they operate other selected businesses that are aimed at leveraging India’s growth potential. On valuation front company is trading at 23xs EV/EBITDA and 3.8xs EV/Sales for FY16 (Jubilant FoodWorks, which is in chained QSR segment is currently quoting at 28.8xs its EV/EBITDA and 3.8xs it’s EV/Sales as per Bloomberg Data). Thus, this offer is worth considering for investment on a long term basis. Hence, we recommend “Long Term Subscribe” to the issue", says AnandRathi Securities research report.For all IPO News, click hereDisclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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