café coffee day ipo valuation model data book v2

7/25/2019 Caf Coffee Day IPO Valuation Model Data Book V2

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Caf Coffee Day IPO

Valuation modelData Book


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ContentsModel Map .............................................................................................................................................. 3

About the company ................................................................................................................................ 4

Valuation Methodology .......................................................................................................................... 6

Assumptions ............................................................................................................................................ 7

Revenue .................................................................................................................................................. 9

Expenses ............................................................................................................................................... 10

Working Capital and Depreciation ........................................................................................................ 11

Working Capital ................................................................................................................................. 11

Depreciation ...................................................................................................................................... 11

Loan and Capital Expenditure ............................................................................................................... 13

Loans ................................................................................................................................................. 13

Capital Expenditure ........................................................................................................................... 13

Financial Statements ............................................................................................................................. 15

Profit and Loss ................................................................................................................................... 15

Balance Sheet .................................................................................................................................... 15

Cash Flow .......................................................................................................................................... 16

Ratios .................................................................................................................................................... 18

Valuation ............................................................................................................................................... 20

DCF Valuation .................................................................................................................................... 20

Relative Valuation ............................................................................................................................. 21


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Model MapData flow of the model is as shown in the figure below. Majorly all inputs and assumptions are

entered in the inputs sheets. These inputs are used to do all the calculationwhich are present in

the Income sheet, Expense sheet, Working Capital sheet, Loan sheet, Capital Expenditure sheet,

Depreciation sheet and DCF Valuation sheet. Ratios and Valuation are the major output sheetsshowing the ratios and IPO valuation based on calculations done.

About

Assumptions

Input sheets Calculations

P&L/CF/BS

Income/

Ex ense

Working

Ca ital

Loan

Capital

Ex enditure

Depreciation

DCFValuation

Output

Ratios

Valuation


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About the companyCaf Coffee Day is a coffee part of Coffee Day Global Limited. They source their coffees from

thousands of small coffee planters. They pioneered in the industry and brought in the concept of

cafes to India. The first one opened in 1996 on Brigade Road in Bangalore and continues to be one of

the most happening places in the city. CCD today is totally in tune with its target audience. Its astrong relationship the brand shares. It's been an exciting journey since then, becoming the largest

organised retail cafe chain in the country. With their international presence, you can travels to

Austria, Czech Republic or Malaysia, stop by a CCD there for the taste of a blend from home.

RANGE OF OUTLETS:

1.

Caf Coffee DayA lot can happen over coffee

Launched in 1996 in Bangalore, Karnataka, India

Over 1423 cafes spread across 209 cities/towns across India

2.

The Lounge

Wider range of Food & Beverages addressing meal needs as well

Targeting a more mature and affluent group of customers. An expressive, explorative

space (owing to the alternate coffee drinking experiences and world cuisine options)

conducive to network and unwind

42 outlets spread across seven cities

3. The Square

Premium range of cafes serving Single Origin Coffees from around the world

Perfect variety of food that complements the wide range of coffees Showcasing a boutique of brewing systems and coffee beans from around the world

Catering to the absolute connoisseur and the well-travelled

7 outlets in four cities.

4. XPRESS Outlets

Caters to the mobile population of a cityalways on the move, always in a hurry

Present in all the key city spots. 'Wherever you go, I am there'that's the motto

No elaborate decorations, just fresh, delicious snacks and steaming beverages that come

in convenient sizes

Total outlets: 590

Found in Shopping malls, Supermarkets, Multiplexes, Corporates, Airports, Railway

stations, Depots, Petrol pumps, Parks, Educational Institutions etc.

GROUP COMPANIES

1) Coffee Day Beverages

Coffee Day Beverages deals with dispensing machines that provide, at the touch of a button, hot

coffee and tea, flavoured milk and even soups through its machines called Celesta. Celesta dispenses

beverages the way you need them.


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2) Coffee Day Fresh & Ground

Freshly ground coffee in mix and match flavours and ratios is the specialty of Fresh & Ground. Fresh

& Ground stores in markets and shopping points cater to coffee lovers who love to make their own

filtered coffee at home. This traditional-thinking, quality conscious shopper is a royal customer. They

look out for freshness and quality, but want to throw in a bit of their own character too. The freshly

procured coffee from plantations is packaged in the way to ensure consistency in freshness. Fresh &

Ground specializes in authentic filter coffee with region specific blends of coffee and tea customized

to demand. Besides an affordable array of coffee powders, we also retail tea to the tea-maker too.

Visit www.coffeedayfng.com for more details.

3) Coffee Day Exports

Coffee Day Exports is truly involved in growing, trading, retailing and exporting world-class coffee. It

has a heritage of over 130 years. Coffee Day Exports is one of the largest exporters of green coffee in

India, since 1999. They also export to the Middle East, Europe and Japan. It has invested in researchand development and applied the learning successfully to improve the promotion of various coffee

blends and augment its exports.

4) Coffee Day Hotels & Resorts

Coffee Day Hotels & Resorts was formed as a subsidiary of Coffee Day Global Limited, the

Chikmagalur resort of The Serai was declared open. The philosophy was single-minded - to open

exclusive retreats in the quietest corners of the country and to offer an experience drenched in

luxury and understated elegance. It is a place where one would come to be pampered like nowhere

else. The Serai, Chikmagalur, as the first such resort did this job brilliantly, nestled as it was in the

greens of the lush coffee plantations around. The concept was so appreciated that we took these

resorts to other reclusive nichesto Bandipur and Kabini. Visit www.theserai.in for more details.

Range of Outlets No. of Outlets Cities About

Caf Coffee Day 1423 209 Regular Cafes

The Lounge 42 7Wider range of Food & Beverages addressing

affluent customers

The Square 7 4Premium range of cafes catering to the absolute

connoisseur

XPRESS Outlets 590 Stand up, walk away, take away Xpress caf


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Valuation MethodologyValuation for Public Offering depends on Qualitative and Quantitative factors. We will discuss both

of them and then derive the valuation for equity proceeds.

Qualitative Factors

Coffee Day has many business strengths allow us to successfully compete in the industry.

Strong home-grown brands with a substantial market presence and proven legacy

Large pan India coffee retail network targeting multiple consumption points and customer

segments

Highly optimized and vertically integrated coffee business

Highly scalable platform for growth driven by deep operational expertise

Low risk, built-to-suit model technology parks with predictable cash flow

Track record of value creation through our non-coffee businesses

Visionary Promoter supported by an experienced and professional management team across

coffee and non-coffee businesses

Quantitative Factors

The face value of the Equity Shares is INR 10 each.

Issue Price is calculated as the average of valuation multiples. The valuation multiples used are

EV/EBIDTA(Peak)7x to 8x

EV/EBIDTA (Average)7x to 10x

P/E25x to 30x

Issue price is decided keeping the above multiples as reference, and looking at the investors

response. Institutional investors are consulted and a particular proportion is decided to be reserved

for them, and rest is open for public issue.

P/E multiple average for the industry is ~ 20x. We expect Coffee Day to trade at a premium due to its

premium brand value, unique business model and large presence across cities. Hence, a P/E

multiple range of 25x to 30x has been considered.

Average P/E Multiple of peers

1. Tata Global Beverages 25.86

2. Bombay Burmah 13.75

3. Tata Coffee 15.51

4. CCL Products 27.56


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Assumptions

1. Base Year

2015 has been taken as the base year, as it is a growing company and current year forms the

base of the expansion plans for the firm. Thus all the growth rates are applied on 2015

values.

2.

2015 values

Please note Draft Red Herring Prospectus gives full year values till 2014 and 9 months values

for 2015. We have extrapolated the 9 months values for full year 2015. This has been done

to get the current base of values upon which the growth rates should be applied.

3. Growth Rate

Growth rate in revenue per outlet: With the proceeds of IPO and robust expansion plans, weexpect the growth in revenue per outlet to be 15% for FY 16 to FY 19, and 10% thereafter.

Growth rate in other income has been considered to be 20%.

4.

Long term inflation rate for Machinery and Equipment and Furniture and Fixtures has been

considered as 8% conservatively.

5.

Increase in number of outlets: 10% till FY 19, and 5% thereafter.

6. Capex Funding: Debt: 50%, Equity 50%

7. Proceeds of IPO: 50% of the proceeds are assumed to be used for debt reduction, and 50%

to be kept as cash for funding future growth

8. Working capital: Working capital days is calculated based on the current financial figures of

Coffee Day.

9. Depreciation rates: Depreciation rates are as mentioned below

MACHINERY & EQUIPMENT

Book DepreciationExisting SLM 10

Additions SLM 15

Tax Depreciation WDV 10%

FURNITURE & FIXTURES

Book Depreciation

Existing SLM 10

Additions SLM 15


10.

Tax assumptions: Current corporate tax structure has been considered.


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Regular Tax: 30%, MAT: 18%, Education Cess: 3%, Surcharge: 10%

11.Valuation assumptions:

DCF

Risk Free Rate of Return 8%

Beta 1.10Terminal Growth rate 5%

No. of shares (In Crore) (Including new issue) 20.83

Amount to be raised (In Crores) 1,200.00

12.Values have been projected till 2030. All P&L,BS,CF statements have been made till 2030


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RevenueA snapshot of revenue calculation is shown below:

Revenue has been calculated for each store category and other income by the below mentioned

methodology.

Revenue for a year = Previous year per out outlet revenue for the category x previous year

number of stores x (1+Growth in number of stores for the year) x (1+increase in per store

revenue for the year)

Revenue for other income = Previous year other income x growth in other income for the

year

Particulars Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22

Revenue

Caf Coffee Day 318 346 381 419 439 441 463

The Lounge 386 419 460 501 526 526 550

The Square 739 904 986 1,068 1,068 1,021 1,021

XPRESS Outlets 175 178 196 216 226 227 238

Others 1,320 1,584 1,901 2,281 2,737 3,285 3,941

Total 2,939 3,431 3,923 4,484 4,996 5,501 6,214


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ExpensesExpenses have been calculated considering the same proportion of this years expenses with respect

to income. The values for the base year have been shown below for reference:

It has been assumed that the current proportion will be maintained for the future years as well.

This is as conservative approachhas no cost synergies have been taken into account which would

come into play with the expansion and better supply chain management.

Therefore, expenses have been calculated as follows:

Manufacturing expense = 23% of revenue for the year

General and Administrative expense = 41% of revenue for the year

Selling and Other Expenses = 21% of revenue for the year

Particulars % Mar-15

Income

Revenue 100% 2,346

Other Operating Income 3% 65

Total Operating Income 2,412

Expenses

Manufacturing Cost -23% (544)

General & Administrative Cost -41% (963)

Selling & Other Expenses -21% (491)

Total Operating Expenses -85% (1,999)


-23%

MANUFACTURING & RAW MATERIAL COST

Caf Coffee Day (74) (80) (88) (97) (102) (102) (107)

The Lounge (90) (97) (107) (116) (122) (122) (128)

The Square (171) (210) (229) (248) (248) (237) (237)

XPRESS Outlets (41) (41) (46) (50) (52) (53) (55)Others (306) (367) (441) (529) (635) (762) (914)

Sub - Total (682) (796) (910) (1,040) (1,159) (1,276) (1,442)

-41%

GENERAL & ADMINISTRATIVE EXPENSES

Caf Coffee Day (130) (142) (156) (172) (180) (181) (190)

The Lounge (158) (172) (189) (206) (216) (216) (226)

The Square (303) (371) (405) (438) (438) (419) (419)

XPRESS Outlets (72) (73) (81) (89) (93) (93) (98)

Others (542) (650) (780) (936) (1,123) (1,348) (1,618)

Sub - Total (1,206) (1,408) (1,610) (1,840) (2,050) (2,257) (2,550)

-21%

SELLING & OTHER EXPENSES

Caf Coffee Day (67) (72) (80) (88) (92) (92) (97)

The Lounge (81) (88) (96) (105) (110) (110) (115)

The Square (155) (189) (206) (224) (224) (214) (214)

XPRESS Outlets (37) (37) (41) (45) (47) (48) (50)

Others (276) (332) (398) (478) (573) (688) (825)

Sub - Total (615) (719) (822) (939) (1,046) (1,152) (1,301)


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Working Capital and Depreciation

Working Capital

Working capital is based on the current number of days of current assets and current liabilities.

These numbers are as mentioned below:

Working Capital Unit Value

Current Assets

Accounts Receivables Days 52

Inventory Days 21

Loans and Advances Days 22

Other Current Assets Days 8

Current Liabilities

Accounts Payable Days 20

Others Days 131

Net Working Capital Cycle Days -47These assumptions are used to calculate the net working capital requirement.

Working capital requirement is financed through working capital borrowing and margin money.

Margin = 25%, Interest on working capital = 15%

DepreciationBook depreciation is calculated based on the following assumption

Depreciation Method Useful Life / %


Book Depreciation

Existing SLM 10

Additions SLM 15


Book Depreciation

Existing SLM 10

Additions SLM 15

Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21

Current Assets excluding Cash

Accounts Receivables 346 433 505 578 661 736 810

Inventory 141 176 206 235 269 300 330

Loans and Advances 147 184 215 245 280 313 344

Other Current Assets 53 66 77 88 101 112 124

Total Current Assets excluding Other

Current Assets686 859 1,003 1,147 1,311 1,461 1,608

Current Liabilities & Provisions

Accounts Payable 131 164 192 219 251 279 308Others 865 1,083 1,264 1,446 1,652 1,841 2,027

Short-term loans 491 - - - - - -

Total Current Liabilities & Provisions 1,487 1,247 1,456 1,665 1,903 2,121 2,335

Net Working Capital (801) (388) (453) (518) (592) (660) (726)

MPBF - - - - - - -

Margin Money - - - - - - -

Interest on Working Capital Loan - - - - - - -


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Tax depreciation is calculated based on the following assumption




Tax Depreciation WDV 20%Gross Block, Accumulated depreciation, Net Block is calculated for both Machinery and Equipment

and Furniture and Fixture. Tax and Book Depreciation is calculated separately.

Book Depreciation Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21


Gross Block 2,013 2,105 2,192 2,324 2,468 2,547

Additions in Block 955 93 86 132 145 79

Depreciation (169) (176) (181) (190) (200) (205)

Accumulated Depreciation (169) (345) (526) (717) (917) (1,122)

Net Block 1,843 1,760 1,665 1,607 1,552 1,426


Gross Block 821 892 959 1,062 1,174 1,235

Additions in Block - 72 67 102 112 61

Depreciation (82) (87) (91) (98) (106) (110)

Accumulated Depreciation (82) (169) (260) (358) (464) (574)

Net Block 739 723 699 703 710 661

Total

Gross Block 2,833 2,998 3,151 3,385 3,642 3,782

Depreciation (252) (262) (273) (288) (305) (315)

Accumulated Depreciation (252) (514) (787) (1,075) (1,380) (1,695)

Net Block 2,582 2,484 2,365 2,310 2,262 2,087

Tax Depreciation Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21


Gross Block 2,013 2,105 2,192 2,324 2,468 2,547

Depreciation (201) (181) (172) (164) (161) (159)

Accumulated Depreciation (201) (382) (555) (718) (879) (1,038)

Net Block 1,812 1,723 1,637 1,605 1,589 1,509

FURNITURE & FIXTURESGross Block 821 892 959 1,062 1,174 1,235

Depreciation (164) (131) (119) (109) (108) (109)

Accumulated Depreciation (164) (295) (415) (524) (631) (740)

Net Block 656 597 545 538 543 495

Total

Gross Block 2,833 2,998 3,151 3,385 3,642 3,782

Depreciation (365) (312) (292) (273) (268) (267)

Accumulated Depreciation (365) (678) (970) (1,242) (1,510) (1,778)

Net Block 2,468 2,320 2,182 2,143 2,132 2,004


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Loan and Capital Expenditure

Loans

Existing and new term loan is assumed to be having tenure of 10 years @12% rate of interest per

annum. New loan is drawn if there is a capex requirement which cannot be met through cash.

Whenever there is a fresh drawdown, the tenure of the loan amount if fixed for next 10 years @

12% Rate of interest.

Capital Expenditure

Total Capex is calculated based on the expense on Machinery and Equipment and Furniture and

Fixture on new stores and inflation.

Total Capex for a year = Number of new outlets x Cost per outlet x (1+Inflation rate)

Loan - Schedule

Particulars Mar-16 Mar-17 Mar-18 Mar-19 Mar-20

Opening Balance 2,588 2,329 2,070 1,812 1,553

Add: Draw Down - - - - -

Less: Repayments (259) (259) (259) (259) (259)

Closing Balance 2,329 2,070 1,812 1,553 1,294

Interest on Loan 295 264 233 202 171

Year 1 2 3 4 5 6 7


Repayment - FY16 Loan - - - - - - -




Repayment - FY20 Loan - - - - - - -Repayment - FY21 Loan - - - - - - -










Total - - - - - - -


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This expense if funded by sources of fund in the following order

1) Cash - (to the extent cash is available)

2)

50% Debt: 50% Equity infusion - (Balance capex after cash)

APPLICATION OF FUNDS


Outlets Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21

Caf Coffee Day 83 78 95 104 57 60

The Lounge 3 2 3 3 2 2

The Square 1 1 1 1 - -

XPRESS Outlets 6 6 34 37 20 21

Total 93 86 132 145 79 83



Caf Coffee Day 64 60 73 81 44 46



XPRESS Outlets 4 4 26 29 15 16Total 72 67 102 112 61 64

TOTAL


Caf Coffee Day 148 138 168 185 101 106



XPRESS Outlets 10 10 60 66 35 37

Total 164 154 234 257 140 147

SOURCES OF FUNDS

FUNDED BY

Sources Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21

Cash 164 154 234 257 140 147

Debt - - - - - -Equity - - - - - -

Total 164 154 234 257 140 147


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Financial Statements

Profit and Loss

Using the calculation of Revenue, Expense, Working capital, Capex requirement, Loan schedule,

Depreciation and various assumptions related to life of assets and interest rates etc. comprehensive

financial statements are prepared for each year. All the line items and format is as shown below

Sheets in the right hand side are the one where data flows from in the P&L sheet.

Balance Sheet

Balance sheet shows the overall financial statement of the company as on date. A standard balance

sheet has been prepared for each year with the format as shown below-

Particulars

Income

Revenue

Other Operating Income

Total Operating Income

Expenses

Manufacturing Cost

General & Administrative CostSelling & Other Expenses

Total Operating Expenses

EBIDTA

Other Non Operating Income

Depreciation

Other Amortizations

EBIT

Interest

Interest on Term LoanInterest on Working Capital

Total Financing Charges

PBT

Taxation

Current Tax

Mat Credit (Entitlement) / Reversal

Deferred Tax

PAT before minority interest and profit

from associates

Less: Minority share in (profit)/ loss

Add: Share in profit/(loss) of associates

Net Profit/(Loss) as restated

Income sheet

Expense sheet

Depreciation sheet

Loan and Working Capital

sheet

Tax sheet


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Notes

i) Provisions have been kept constant

ii)

Other Non-current assets, Non-current investments and Long-term loans and advances

have been kept constant as their treatment would be at the discretion of the company

iii) Short term and Long term provisions have been kept constant

Cash Flow

Standard Indirect Cash flow statement has been prepared for all years in the format shown below


EQUITY AND LIABILITIESShareholders funds 1,599 1,680 1,873 2,171 2,582 3,096 3,717

(a) Share Capital 34 34 34 34 34 34 34

(b) Reserves and Surplus 1,565 1,646 1,839 2,137 2,548 3,062 3,683

Minority Interest 506 505 507 512 521 532 547

Non-current Liabilities 2,852 2,593 2,334 2,075 1,816 1,558 1,299

(a) Long-term borrowings 2,588 2,329 2,070 1,812 1,553 1,294 1,035

(b) Deferred Tax Liability 26 26 26 26 26 26 26

(c) Other long-term liabilities 192 192 192 192 192 192 192

(d) Long-term provisions 46 46 46 46 46 46 46

Current Liabilities 1,517 1,277 1,485 1,694 1,933 2,150 2,364

(a) Trade payables 131 164 192 219 251 279 308

(b) Other current liabilities 865 1,083 1,264 1,446 1,652 1,841 2,027

(c) Short-term loans 491 - - - - - -

(d) Short-term provisions 29 29 29 29 29 29 29

Sub-Total 6,473 6,054 6,200 6,453 6,851 7,335 7,927

ASSETSNon-current Assets 4,508 4,416 4,302 4,259 4,222 4,052 3,878

Goodwill on consolidation 510 510 510 510 510 510 510

(a) Fixed assets 2,883 2,791 2,677 2,633 2,597 2,426 2,253

(i) Tangible assets 1,879 2,582 2,484 2,365 2,310 2,262 2,087

(ii) Intangible assets 50 45 40 35 30 25 20

(iii) Capital work-in-progress 955 164 154 234 257 140 147

Machinery & Equipment 955 93 86 132 145 79 83

Furniture & Fixtures - 72 67 102 112 61 64

(b) Non-current investments 501 501 501 501 501 501 501

(c) Long-term loans and advances 485 485 485 485 485 485 485

(d) Other non-current assets 129 129 129 129 129 129 129

Current Assets 1,965 1,638 1,897 2,194 2,629 3,284 4,049

(a) Current Investments 3.01 2.95 2.87 2.84 2.82 2.71 2.59

(b) Cash and cash equivalents 1,276 776 892 1,044 1,315 1,820 2,438

(c) Accounts Receivables 346 433 505 578 661 736 810

(d) Inventory 141 176 206 235 269 300 330

(e) Short-term loans and advances 147 184 215 245 280 313 344

(f) Other current assets 53 66 77 88 101 112 124

Sub-Total 6,473 6,054 6,200 6,453 6,851 7,335 7,927


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Cash Flow StatementCash Flow from Operations 219 791 879 989 1,074 1,162

PAT 80 195 303 419 525 636

+ Depreciation and Amortization 256 267 278 293 310 320

+ Interest 295 264 233 202 171 140

- Change in Working Capital (413) 65 65 74 68 67+ Deferred Taxation - - - - - -

Cash Flow from Investing (164) (153) (234) (257) (140) (147)

Investment / (Disinvestment) of Current Investments 0.06 0.08 0.03 0.02 0.11 0.12

Capital Expenditure (164) (154) (234) (257) (140) (147)

Cash Flow from Financing (554) (523) (492) (461) (430) (399)

Interest & other finance charges (295) (264) (233) (202) (171) (140)

Inc / (Dec) in Equity - - - - - -

Inc / (Dec) in Debt (259) (259) (259) (259) (259) (259)

Opening Cash Balance 1,276 776 892 1,044 1,315 1,820

Cash Movement (500) 115 153 271 505 617

Closing Cash Balance 1,276 776 892 1,044 1,315 1,820 2,438


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RatiosFollowing ratios have been calculated:

1 Long Term Debt / Net Worth (incl DTL)

2 Long Term Debt / Net Worth (excl DTL)

3 Total Debt (Net) / Net Worth (incl DTL)

4 Total Debt (Net) / Net Worth (excl DTL)

5 TOL/TNW (DTL - part of Net Worth)

6 TOL/TNW (DTL - part of Liability)

7 Equity Ratio (Equity / Assets)

8 Debt Ratio (Total Debt / Total Assets)

9 Times interest earned (EBIT / total interest)

10 ISCR

16 Total Debt/EBIDTA

17 Total Net Debt/EBIDTA (Debt considered excl cash)

18 Current Ratio (Excl next yr repayments) - Including Cash

19 Current Ratio (Incl next yr repayments) - Including Cash

20 Current Ratio (Excl next yr repayments) - Excl Cash

21 Current Ratio (Incl next yr repayments) - Excl Cash

22 EBIDTA (%)

23 Depreciation (%)

24 EBIT (%)

25 Interest on Term Loan (%)

26 Interest on Working Capital (%)

27 EBT (%)

28 Tax (%)

29 PAT (%)30 Adjusted PAT(%)

31 EPS

The definition of various items to calculate ratios has been shown explicitly along with the

calculation sets for each year.

1. Net Debt

2.

Total Outside Liabilities

Long Term Debt

Secured Loans

Other Loans

Total Long Term Debt

Less: Long Term Cash

Net Long Term Debt

Long Term Debt

Working Capital Debt

Total Debt

Less: Cash

Total Net Debt


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3. Net Worth

4.

Net fixed assets

These ratios are used to check the covenants and to financial performance for the company in the

future years. They are also used to get the value of various multiples for Valuation purpose.

Total outside liabilities

Total Debt

Current Liabilities

Other Liabilities

Total Outside Liabilities

Less: CashTotal Outside Liabilities (net of cash)

Reserve & Surplus

Less: Misc Exp w/off

Net Worth (w/o DTL)

Deferred Tax Liability

Net Worth (with DTL)

Gross Fixed Assets

CWIP

Less: Depreciation

Net Fixed Assets


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Valuation

DCF Valuation

DCF valuation has been done by calculation Free Cash Flow to Equity for each year, and then

discounting the cash flows to present year by Calculation the Net Present Value per equity share.

Free Cash Flow to Equity = Net Income + DepreciationCapital ExpenditureChange in

Working Capital + Net Borrowings

Terminal Growth Rate of 5 % has been considered

Discount rate = Risk Free rate + Beta x ( Market rate of returnRisk Free rate) = 8.1 % + 1.1 x

(15.1 % - 8.1%) =15.8%

A snapshot of all the calculations has been shown in the next sheet


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Relative Valuation

Multiples used for Valuation with the multiple range is as follows

1. EV/EBIDTA (Peak)7x to 8x

2. EV/EBIDTA (Average)7x to 10x

3.

P/E25x to 30x

We expect Coffee Day to trade at a premium valuation to peers because of its strong brand,

and unique business model

Enterprise Value = Total Debt

Cash + Total Equity

Therefore, Market Cap = Enterprise ValueTotal Debt + Cash

1.

EV/EBIDTA Valuation(Peak) multiple calculation

2. EV/EBIDTA Valuation (Average) multiple calculation

1. Tata Global Beverages 25.86

2. Bombay Burmah 13.75

3. Tata Coffee 15.51

4. CCL Products 27.56

Average PE Multiple of peers

7 Times 8 times

Effective Year Mar-17 Mar-17

Peak EBIDTA Rs. Crore 2,917 2,917

EV/EBIDTA multiple x 7 8

EV Rs. Crore 20,418 23,335

Long Term Debt Rs. Crore 2 ,070 2,070

Working Capital Debt Rs. Crore - -

Less: Cash available Rs. Crore (1,820) (1,820)

Total Debt Rs. Crore 250 250

Market Cap (B/f) Rs. Crore 20,168 23,085

No. of existing shares Crore 20.83 20.83

Additional shares Crore - -

Total No. of shares Crore 20.83 20.83

Expected Market Price Rs 968 1,108

EV/EBIDTA Valuation (Peak)Valuation

Valuation Valuation

7 Times 10 timesAverage EBIDTA Rs. Crore 783 783

EV/EBIDTA multiple x 8 10

EV Rs. Crore 6,266 7,833

Long Term Debt Rs. Crore 2 ,070 2,070

Working Capital Debt Rs. Crore - -

Less: Cash available Rs. Crore (1,820) (1,820)

Total Debt Rs. Crore 250 250

Market Cap (B/f) Rs cr 6,016 7,583

No. of existing shares Mio 20.83 20.83

Additional shares Mio - -

Total No. of shares Mio 20.83 20.83Expected Market Price Rs 289 364

EV/EBIDTA Valuation (Avg)


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3.

P/E Multiple

Public Issue PriceIPO price has been considered as the average of the three valuation

multiples

Valuation Valuation

25 Times 30 times

Average Net Profits Rs cr 458 458

PE Multiple # x 25 30

No. of Shares Mio 20.83 20.83EPS Rs. 22 22

Expected Market Price Rs cr 550 660

PE Multiple Valuation

Average

7 8 7 10 25 30

Valuation 968.37 1,108.42 288.87 364.09 550.32 660.38 656.74

ParticularsEV/EBIDTA (Peak) EV/EBIDTA (Avg) PE

café coffee day ipo valuation model data book v2

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