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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
Tax Depreciation WDV 20%
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)
Particulars Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22
-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 / %
MACHINERY & EQUIPMENT
Book Depreciation
Existing SLM 10
Additions SLM 15
FURNITURE & FIXTURES
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
MACHINERY & EQUIPMENT
Tax Depreciation WDV 10%
FURNITURE & FIXTURES
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
MACHINERY & EQUIPMENT
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
FURNITURE & FIXTURES
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
MACHINERY & EQUIPMENT
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
Particulars Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22
Repayment - FY16 Loan - - - - - - -
Repayment - FY17 Loan - - - - - - -
Repayment - FY18 Loan - - - - - - -
Repayment - FY19 Loan - - - - - - -
Repayment - FY20 Loan - - - - - - -Repayment - FY21 Loan - - - - - - -
Repayment - FY22 Loan - - - - - - -
Repayment - FY23 Loan - - - - - - -
Repayment - FY24 Loan - - - - - - -
Repayment - FY25 Loan - - - - - - -
Repayment - FY26 Loan - - - - - - -
Repayment - FY27 Loan - - - - - - -
Repayment - FY28 Loan - - - - - - -
Repayment - FY29 Loan - - - - - - -
Repayment - FY30 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
MACHINERY & EQUIPMENT
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
FURNITURE & FIXTURES
Outlets Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21
Caf Coffee Day 64 60 73 81 44 46
The Lounge 2 2 2 2 1 1
The Square 1 1 0 0 - -
XPRESS Outlets 4 4 26 29 15 16Total 72 67 102 112 61 64
TOTAL
Outlets Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21
Caf Coffee Day 148 138 168 185 101 106
The Lounge 5 4 5 5 3 3
The Square 2 2 1 1 - -
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
Particulars Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21
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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Particulars Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21
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