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Coffee Day Enterprises Shares Sink on Debut

Analysts had also pointed that the company pays a huge interest on the high debt (the Rs 4,500 crore according to ICICI Securities) it has on its books. Coffee Day Enterprises said it will pay more than half of the Rs 1,150 crore raised for repayment of debt.
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Coffee Day Enterprises Shares Sink on Debut

Coffee Day Enterprises shares dropped as much as 14.5 per cent on the first day of trade on Monday. The company that runs the Cafe Coffee Day retail chain had raised Rs 1,150 crore through its initial public offer in October.

Shares in Coffee Day Enterprises hit a low of Rs 290.70 on the Bombay Stock Exchange as against their issue price of Rs 328. Coffee Day Enterprises IPO was subscribed 1.64 times.

TS Harihar of HRBV Client Solutions told NDTV that Coffee Day Enterprises shares are "fairly valued".



"There is certainly a novelty value to it because you don't have a similarly listed stock in the market, but Rs 328 seem to be fairly valued at this point of time," Mr Harihar added.

Many analysts had cautioned investors about the company's lack of profitability ahead of the IPO. Coffee Day Enterprises has been posting losses for the last three years (FY15 net loss at Rs 87 crore) because of high depreciation and interest costs.

Analysts had also pointed that the company pays a huge interest on the high debt (Rs 4,500 crore according to ICICI Securities) it has on its books. Coffee Day Enterprises said it will pay more than half of the Rs 1,150 crore raised for repayment of debt.

Coffee Day Enterprises had raised over Rs 334 crore from anchor investors ahead of the IPO, while in March, the firm had mobilised Rs 100 crore in a pre-IPO funding from Nandan Nilekani and Rare Enterprises (owned by Rakesh Jhunjhunwala and Ramesh Damani), among others.

Coffee Day shares closed at Rs 270.50, down 17.5 per cent from its IPO price. The broader NSE index ended down 0.2 per cent.



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