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# derived figure

Fresh Issue:  3,50,60,976 eq. shares

Equity Shares Outstanding Prior to the Issue: 11,67,32,408

Compulsorily Convertible preference shares (@ Rs. 10): 1,35,74,100

 Equity Shares Outstanding after the Issue: 15,17,93,384 #

 #derived figure

India is primarily a tea-drinking country especially in non-southern reasons but coffee culture is picking up with the rising prowess of the cosmopolitan culture coupled with the expansion drive of various domestic and international café brands. Per-capita coffee consumption in India was just 110 grams per year in stark contrast to developed world countries with the same being 8 KG per year.

The present organized café market in India is estimated to be Rs. 67 Billion and is supposed to grow at a CAGR of 15 % to Rs. 151 Billion by 2020. 

The company is country’s largest coffee outlet chain with a market share of 46 5 %.  CDEL carries out its businesses with its 40 subsidiaries

The  operates in 4 business segments- Coffee Business, Logistics, Financial Services and Technology Parks  contributing 50 %,37 %,7.5 % and 3 % respectively  of its consolidated revenue.

Presently CDEL boasts 1,423 CCD (Café Coffee Day) and 42 The Lounge outlets.

CDEL operates in the technology parks business through its wholly own subsidiary Tanglin Development Limited or TDL. TDL is engaged in development and management of technology parks and related infrastructure facilities for IT/ITES enterprises.

CCD enjoys leadership position

Sical Logistics Limited (SLL), the 52.83 % owned listed-subsidiary of CDEL, is involved in the business of logistics.

Way 2Wealth SecuritiesPrivate Limited (W2W Securities) is an 85.53% owned subsidiary involved in the business of investment advisory.

The company is also involved in the hospitality business through its wholly owned subsidiary Coffe Day Hotels and Resorts Private Limited (CDHRPL) under the brand name of The Serai.

CDEL holds investment in few IT-ITES companies like Mindtree, Magnasoft, Global edge and Ittiam.

V G Siddharth is the CMD and promoter of the company holding around 55% of the pre-issue shares.

A few prominent investors are KKR Mauritius (3.43 %), Nandan Nilkani (1.77%) and Bennett & Coleman Co. Limited (1.17 %).

CDEL has a positive operating cash flow but it has been witnessing net losses for past few years as a major chunk of its revenue, is being eaten up  by the finance cost, other expenses and depreciation. Being a loss making company Return Ratios are meaningless and ratios like Price-to-Book and EV/EBITDA come handy.

Post-issue its Price-to Book is almost 11 whereas EV/EBITDA stands at 22.5.

These valuations are stretched for a loss making company like CDEL.

Even after the loan repayment to the extent of  Rs. 633 crore, a significant amount of debt shall be there on books,

Coffee business and Logistics constitute around 87 % of the total revenue whereas the businesses of financial services,technology parks and other businesses are still in their nascent stages.

Though CDEL is the pioneer of cafe culture in India but considering the per-capita coffee consumption in India,cut-throat competition, higher debts on the books and the stretched offer price of the issue, this issue does not seem that intriguing in the short to medium term and its short-term future might be more  influenced by the hype and exuberance of the market than the valuations.

# derived figure

Offer For Sale:  58 lakh equity shares/ Rs. 90 crore

Fresh Issue:  3.29 crore equity shares/ Rs. 510 crore

Equity Shares Outstanding Prior To The Issue: 10,97,04,798 equity shares

Equity Shares Outstanding After The Issue: 14,26,08,024 equity shares #

#derived figure

Container Industry primarily provides 2 facilities, CFS (Container Freight Station) and ICD (Inland Container Depot).  Both these CFSs and ICDs provide a wide range of services like custom clearance, handling & temporary storage of laden and empty containers (imported or to be exported).

 A CFS is located near a dock port whereas an ICD is situated in the hinterlands. For FY 14, container industry in India was worth Rs. 45 billion (CFS: Rs. 30 billion, ICD Rs. 15 billion).

Navkar Corporation Ltd. is a CFS operator in India with 3 CFSs with the aggregate installed handling capacity of  3,10,000 TEU (Twenty-Foot Equivalent Unit) per annum to its credit-Ajivali CFS 1&2 and Somathane CFS –which are strategically located in the proximity of the JN port. Besides this, Navkar Corp also owns and operates 516 trailers plying between CFSs and the JN port by road.

Navkar Corp also offers the temperature control and hazardous cargo storage and handling services. Its warehouses spread over an aggregate area of around 5,00,000 sq. ft.

A few big shipping line players like United Arab Shipping Agency, NYK line Ltd., Hyundai Merchant Marine, Evergreen Shipping etc avails the company’s services.

Its CFSs are located in close proximity to the JN port in Panvwel and it is worth noting that JN port handles around 56 % of the total container traffic across all the major ports of India.

Navkar Corp Ltd. proposes to establish  a fully integrated logistics park and an adjacent ICD at Umergaon at the Valsad district, Gujarat thus creating a one-stop solution for importers and exporters.

The 'comparison with the peers' data shows that valuations of Navkar are not much cheaper than the industry ace GDL. Besides return ratios, GDL is a better company with reliable promoters and better operational expertise. As per the investment perspective in the mind, investing in GDL instead seems as a better and secure choice. The revenue for the company comes from JN port and this dependence on a single source makes it vulnerable to uncertainties.

But considering the present government’s thrust on improving the Indian transportation environment and under this initiative port based SEZs, port connecting highway project at JN port and DFC(Dedicated Freight Corridor) between Mumbai and Delhi  etc will be set up and the same is supposed to boost Navkar’s volume growth.

Clearly, Nvakar is not a short term bet!

Listing gains will depend on the overall market conditions and the underlying euphoria.

Power Mech is one of the leading power-Infrastructure Company which provides ETC-BTG (erection, testing and commissioning of boilers, turbine and generators), BOP, civil works and O&M (operations & Maintenance) services to power sector and other allied industries like petrochemical, steel and cement.

For FY 14, erection works constituted around 72 % of the total operating revenue. The company is presently engaged in more than 100 erection works projects across India and abroad.

Though, prima facie fundamentals of this company seem satisfactory but this company has a thin net-profit margin and there lies a miniscule cash flow in comparison to its sales.

Except L&T, other peers like BGR energy, Sunil Hitech and Techno Electric all trade at a lower price to earnings multiple than Power Mech. L&T being a diversified company justifies its higher earnings multiple.

This company works in a highly capital intensive industry and maintaining its working capital at an optimum level- is a perquisite and hence this issue is being floated.

Order book of this company is robust but cancellations and variations too keep on taking place and the same could reduce the size of the order book.

The company mainly caters the thermal power sector and power sector is presently facing a slowdown and as a significant portion of the company’s revenue comes from government entities and as such matters are subjected to changing government policies, red-tapism, corruption, routine reviews and audits etc,, there lies  high compliance costs and sometimes payment gets delayed or disallowed.

I did not find any reason to delve deeper into this issue as in the short run this issue may not be a viable one and in the medium to long run its future prospects are not that bright.

I better skip this issue.