Stock Under Rs 25: Shares of this Coffee Brand Surge 20 per cent and Locked in Upper Circuit as NCLAT Sets Aside Insolvency Proceedings
The company has reduced its debt and its stock is trading at 0.20 times its book value.
Shares of Coffee Day Enterprises (CDEL) surged to the 20 per cent upper circuit limit at Rs 25.65 on the BSE during Monday's opening session, March 3. The sharp rise followed the National Company Law Appellate Tribunal’s (NCLAT) decision on February 27 to overturn insolvency proceedings against the company, which owns the Café Coffee Day chain.
A two-judge bench of the Chennai NCLAT, comprising Justices Sharad Kumar Sharma and Jatindranath Swain, revoked an earlier order by the Bengaluru bench of the National Company Law Tribunal (NCLT). While the ruling was announced in open court, a detailed order is awaited.
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CDEL, the parent entity of Coffee Day Group, operates Café Coffee Day outlets, runs a resort, provides consultancy services, and engages in coffee bean trade.
Last week, the insolvency proceedings against CDEL resumed due to the appellate tribunal’s inability to issue an order within the Supreme Court’s deadline of February 21. The case dates back to August 8, 2024, when the Bengaluru NCLT admitted IDBI Trusteeship Services Ltd.’s (IDBITSL) petition, citing a default of Rs 228.45 crore and appointing an interim resolution professional. CDEL’s suspended board appealed to the NCLAT, which granted a stay on the proceedings on August 14, 2024.
IDBITSL later challenged this stay before the Supreme Court, which directed the Chennai NCLAT to resolve the matter by February 21, 2025.
CDEL has been navigating financial difficulties since the passing of its founder, V.G. Siddhartha, in July 2019. The company has been reducing debt through asset resolutions and has significantly downsized its operations since the crisis began.
About the Company
Incorporated in 1996, Coffee Day Enterprises Ltd is in the business of Coffee and related business, Integrated multimodal logistics, Financial services, Leasing of commercial office space, Hospitality services and Investment and other corporate functions
With a market capitalisation of Rs 538 crore and a PE ratio of 14.2x, the company trades at a discount compared to the industry PE of 405. The company has reduced its debt and its stock is trading at 0.20 times its book value
Investors should keep an eye on this micro-cap stock.
Disclaimer: The article is for informational purposes only and not investment advice.