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Last updated: October 15, 2015 at 13:51 pm

IndiGo Plans Rs 2500 Cr IPO Launch On Oct 26th; Café Coffee Day IPO Gets Lukewarm Response


Café Coffee Day’s debut IPO was launched yesterday, but as per reports coming in, investors were not too enthusiastic about it. Meanwhile, IndiGo has announced their IPO launch on October 26th, through which they aim to raise close to Rs 2500 crore.

IndiGo IPO

InterGlobe Aviation Ltd, which owns IndiGo Airlines has announced their initial public offer (IPO) launch on October 26th. They would be filing their papers with Registrar of Companies (RoC) today to formally kickstart the process.

They have already filed their draft red herring prospectus with the Securities and Exchange Board of India on June 30th.

Citigroup Global Markets India Pvt. Ltd, JP Morgan India Pvt. Ltd and Morgan Stanley India are the official bankers for this IPO launch, while Barclays Bank, Kotak Mahindra Capital and UBS Securities India are other bankers for this issue.

IndiGo is right now India’s biggest and most profitable airlines company, and their IPO launch has created a buzz in the market.

As per initial speculations, shares of IndiGo would be priced between Rs 400 to Rs 418. Earlier, it was reported that IndiGo is seeking pre-money equity valuation of Rs 14,500 crore and an enterprise valuation of Rs 17,000 crore, which makes it an interesting buy.

This IPO launch will make IndiGo’s founder Rakesh Gangwal, a billionaire as we reported earlier this month. Around 12% of the company’s share would be offered to public, which translates to about 30,146,000 equity shares.

IndiGo’s IPO was considered as much awaited, as this is the only airlines which has posted a profit this year. All other airlines, including Spicejet, Jet and Go had been in red.

clip_image002Source: qz.com

In September, they announced a profit before tax of Rs 1847 crore, and a net profit of Rs 1304 crore, which is a 25% jump, compared to previous year. Both high passenger traffic and low jet fuel cost has been attributed to such tremendous performance.

IndiGo is currently operating 97 planes and offers 648 flights daily, and commands 33.8% market share of domestic traffic. In August this year, they placed an order of 250 Airbus A320 Neo Single-Aistle jet, worth $26.5 billion. As of now, IndiGo has ordered 530 aircrafts from A320 family, out of which 100 has been delivered.

Investors Cautious Over Café Coffee Day IPO

Meanwhile, India’s largest coffee chain: Café Coffee Day’s IPO was launched on Wednesday, and as per initial reports, investors are cautious as it has received lukewarm response.

At a price band of Rs 316-328, CCD is planning to sell 25.8 million shares, with plans to raise Rs 1150 crore. 14% of the company’s shares are out for the public.

At the time of market closure on Wednesday, institutional investor category under their IPO was subscribed 16% while the retail and high net-worth individual’s categories were subscribed just 2% and 16% respectively.

As per details submitted to stock exchange, CCD was able to raise Rs 334.2 crore from anchor investors, which include both foreign and domestic institutional investor, for a price of Rs 322 per share.

Despite having a strong brand presence and wide distribution across every major city, financial experts are worrying over the valuation of the company, highly priced IPO and the company structure.

Ambit Capital said in a statement, “Coffee is just a part of a larger but unbalanced dish. The company’s structure (40 subsidiaries) and 5 diverse and unrelated businesses make the company’s structure that of a conglomerate; moreover, all the businesses have a history of poor RoCE (return on capital employed),”

Arun Kejriwal, director, Kejriwal Research and Investment Services said, “One major concern is that the business for which he is raising money is not where he is going to use the money,”

As per the papers filed, CCD is aiming to clear their debt of Rs 500 crore from the money generated via IPO, which is creating doubts in the minds of investors. Some are claiming that they can get a better price from the secondary market, compared to IPO.

As of now, CCD manages 1550 cafes, across 209 cities; which makes them much bigger than Domino’s which has 921 outlets, McDonald’s which have 300-350 outlets and Subway, which have 531 outlets. Starbucks is still at a nascent stage in India, with only 90 odd outlets.

After Jubilant Foodworks’s IPO in 2010 (they are the owners of Domino’s brand), CCD’s is the largest IPO in the food and beverage sector.

Sources: 1, 2, 3

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