Coffee Day, a long term growth story: KRChoksey

Coffee Day Enterprises (CDEL) IPO note by KRChokseyCCD has the largest footprint of cafés Network, with 1,538 outlets spread across 219 cities in India and a market share of approximately 46% in terms of the number of chained café outlets. The café footprint is nearly four times larger than the cumulative footprint of the next four competitors. They have a significant pan- India presence through their Café Coffee Day outlets and also have 561Coffee Day Xpress kiosks across 12 cities and 421 F&G outlets across five states in India.  Apart from coffee retailing, the company is also present in the out-of-home coffee consumption via installing and maintaining the coffee vending machines in corporate, malls and for institution clients etc. With their experience of growing and developing Café Network outlets and Coffee Day Xpress kiosks over the past two decades has placed them at a vantage point, giving unique understanding of the demographic,  psychographic and geographic landscape of consumers across India. They have been able to successfully leverage first mover advantage and experience to identify various café formats and selecting locations for setting up café outlets and kiosks.Outlook: "The Café business (CDG) is the flagship and focus business for the holding company and over the years it has created a marquee café format and brand Café Coffee Day. It has been posting healthy SSG of 6% and average sales/café/store of 9% CAGR in last 5 years. CCD has a strong EBITDA margin profile at the store level of 21% (higher vs other QSR formats). We are recommending investors with long term horizon to subscribe the issue as the growth potential in the café industry and CCD’s focus on increasing revenues via better mix, increase consumption and higher footfalls", says KRChoksey research report.For all recommendations, 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.

Read More