Shares of Coffee Day Enterprises have been a laggard on the bourses, with current valuation at half of what it was in January 2018, when the share touched its all-time high.
Further, a significant portion of the promoter holding is pledged and the company has been reporting losses in every fiscal since listing in November 2015.
On Tuesday, shares of Coffee Day Enterprises, which manages the Cafe Coffee Day chain of cafes in nearly 250 cities, were locked at their lower circuit of 20% to close at ₹154.05, which was also the all-time low for the stock.
At ₹3,254.33 crore, the current market capitalisation of the company is over 57% lower than its peak valuation of ₹7,609 crore in January 2018 when the shares had touched a record high of ₹360.
Incidentally, the company is part of the BSE 500 index and has underperformed the broader index since touching its high last year. Since January 2018, while the BSE 500 index has lost nearly 8%, the benchmark Sensex is up 4.47%.
“Share price in today’s market is irrelevant because there are too many moving parts in this puzzle,” said Arun Kejriwal of Kejriwal Research and Investment Services.
“The apparent debt figure does not add up. The letter purported to be written on July 27 does not make sense as the source of the letter is not yet disclosed. To make matters worse, the company, its secretary and compliance officer along with its board of directors seem to be playing hide-and-seek with the issue on hand,” he added.
While promoters hold a stake of nearly 54% in the company, V.G. Siddhartha and wife Malavika Hegde have a combined directly holding of 36.80%. The balance stake is held through holding companies.
As of June 30, nearly 76% of the promoter stake was pledged as per data available on the BSE website.
The Prominent public shareholders include Nandan Nilekani (2.69%) along with private equity entities like NLS Mauritius LLC (10.61%), KKR Mauritius PE Investments (6.07%) and two funds of Marina Singapore with a combined stake of 5.67%.
The financials of the company also present a lacklustre picture.
For the quarter ended March 31, the company reported a net loss of ₹22.28 crore, higher than the corresponding quarter’s loss of ₹16.52 crore.
In 2018-19, the company registered a loss of ₹67.71 crore, higher than the previous year’s loss of ₹61.49. Total income also fell to ₹124.06 in 2018-19 from ₹142.02 in 2017-18.
The company, however, has been able to shrink its losses considering that it registered a loss of ₹110.52 crore in 2015-16.
The company Coffee Day Enterprises entered the capital market in October 2015 with an initial public offer (IPO) to raise around ₹1,150 crore at a price of ₹328 a share.
The public issue managed to sail through due to a strong response from institutional investors even as the portions reserved for retail and high networth individuals remained under-subscribed.
The institutional portion was subscribed 4.39 times, while the overall issue was subscribed 1.8 times. The issue price of the company was fixed at ₹328.
