Smallcap Stock Near Rs 50; Coffee Day Hits 20% Upper Circuit On Settlement With Lender IndusInd Bank

Coffee Day Enterprises, the Indian multinational chain Cafe Coffee Day owner, froze at 20% upper circuit on September 13 after the company reached a settlement with its creditor IndusInd Bank. Following this, the two parties told the Chennai bench of the National Company Law Appellate Tribunal (NCLAT) that they had withdrawn insolvency litigations. Coffee Day is a smallcap stock trading near Rs 50 levels. In a six-months period, the stock rallied nearly 57% on the BSE.

On September 13, Coffee Day shares ended at Rs 51.26 apiece on BSE, which is the 20% upper circuit limit. Generally, the upper circuit in a share price means that there were several buyers but no sellers.

In the pre-market opening of Thursday, the stock extended its gain by a whopping 7.10% to trade at Rs 54.90 apiece on BSE. Its current market cap is around Rs 1,146.89 crore.

In its regulatory filing, Coffee Day said, "The NCLAT, Chennai on 13th September 2023 passed an order terminating CIRP Proceedings against CDGL and set aside NCLT order."

Both Coffee Day and IndusInd Bank have reached a settlement following which NCLAT recorded their submissions and set aside the July order where the tribunal submitted the Bengaluru-based coffeehouses company for insolvency proceedings.

It was in July, the National Company Law Tribunal (NCLT) bench in Bengaluru registered Coffee Day for insolvency after the petition filed by the leading private sector lender, IndusInd Bank alleging default on Rs 94 crore loan amount.

NCLT's order took into account various credit facilities that Coffee Day obtained from IndusInd Bank in 2018. These included short-term loans as export advances, bank guarantees, secured overdraft EPC/PSFC/PCFC/FBD/FBP, performance guarantees and also derivative limits/forward cover.

Notably, Coffee Day did argue regards to various points which were filed by IndusInd Bank, however, did not deny the default amount and the dates on which it defaulted.

Earlier, on August 11, the NCLAT had stayed on the NCLT order dated July 20, 2023, pushing Coffee Day to continue on the insolvency path. However, while staying on the NCLT order, the tribunal also observed that there were some arguable points which needed clarification and hence it directed IndusInd Bank to file its response in two weeks.

Nevertheless, IndusInd Bank and Coffee Day have comes to the term of an agreement related to defaulted dues.

The Company's net worth stood at Rs.3,376 crore as on 31st March, 2023, decreased by 11%, compared with Rs 3,775 crore as on 31st March, 2022. The net worth comprised of paid-up equity share capital amounting to Rs 211.3 crore as on 31st March, 2023 (211,251,719 equity shares of Rs 10 each fully paid up) and Noncontrolling interests of Rs 158 crore. The Company's reserves and surplus stood at Rs3,007 crore as at 31st March, 2023.

As on 31st March, 2023 the total loan funds stood at Rs 1,600 crore which comprises of long-term borrowings of Rs 1,297 crore and short-term borrowings of Rs 303 crore and the Company's net debt stood at Rs 1,524 crore.

Coffee Day is known for its long standing love affair with coffee - going all the way back to the mid 1800s. The company has 495 cafes spread across 158 cities and 285 CCD Value Express kiosks. Apart from this, under its brand, the company has stored 38,810 vending machines that dispense coffee in various corporate workplaces and hotels.