Coffee Day shares rise despite clarification by ITC

Shares of Coffee Day Enterprises (CDE) have been rising northwards in last few sessions. The shares were locked in the upper circuit for the third consecutive session on Wednesday on reports that FMCG major ITC is looking to acquire stake in the company.

However, Coffee Day has clarified in a BSE filing that it is factually incorrect and the company is unaware of the said news. ITC has also denied the reports and informed that no progress was made on the matter.

The stock has rallied 16.1 per cent in last three straight sessions. Post untimely death of its founder V.G. Siddhartha, the stock dropped 68.5 per cent for 16 sessions. 

Buying activities in the stock was triggered after reports that the promoters were looking to resume talks with Coca-Cola for a stake sale in Cafe Coffee Day chain. The deal would have helped Coca-Cola to expand its operations into café segment, apart from its core carbonated drinks portfolio.

The markets have also reacted positively to the company’s steps towards reducing debt. The company’s decision of selling Coffee Day Enterprises (CDEL) tech park is believed to reduce the company's debt to Rs. 1,000 crore. The company had sold Global Village Tech Park by its subsidiary Tanglin Developments to Blackstone for Rs. 2600-3000 crore on August 14. The company's debt as on July 31, 2019, was Rs. 4,970 crore.

Coffee Day Enterprises owns Café Coffee Day, India's largest cafe chain that operates 1,750 outlets across the country.

On Thursday, at 12:55 hours, the stock of Coffee Day Enterprises was quoting Rs. 76.40 per share, up by Rs. 3.60 or 4.95 per cent on BSE. The stock hit an intraday high of Rs. 76.40 during intraday trade and an intraday low of Rs. 62.95 on BSE.