Cafe Coffee Day’s Turnaround Stories Appear To Be Bogus

Every millennial has had coffee at least once in Cafe Coffee Day (CCD). That’s how big and influencing the brand was, but after the entry of Starbucks, the competition grew tough. Our good old CCD couldn’t keep up with the new trends and slowly started going away from our sight. But there could be a turnaround soon. Read up to know what’s happening!
Cafe Coffee Day’s Turnaround Stories Appear To Be Bogus

What’s Happening?

The nostalgic times at CCD could be relived again, but chances appear to be slim, so let’s keep our hopes tight. After the sudden demise of V.G. Siddhartha, the founder of the coffee empire died by suicide in 2019, the company dived. The allegations against the founder were shocking like the company delayed filing the annual financial statements, and it was buried in debt. Then SEBI suspended trading of Coffee Day Enterprises (CDE) shares for over a year. All this resulted in the closure of CDE stores.

Recently, the shares of CCD began to rise. All of a sudden, the media became abuzz with CDE news again. It’s said that the wife of the late founder Malavika Krishna has been paying the company’s debt; it has reduced from over Rs 7,000 crore in 2017 to Rs 2,000 crore today.

Another grapevine in the media biz is that the coffee empire could sell its stake to Coca Cola. While some say that the company’s non-core businesses have been sold to pay the creditors. All these rumours are based on no strong foundation because the company in its recent press filing clarified, “We hereby inform/confirm you that to the best of our knowledge that we do not have any events, information etc., that have a bearing on the operation/performance of the company or any other price-sensitive information. Therefore, the movement in the price of shares of the company is purely due to market conditions and absolutely market-driven and the management of the company is in no way connected with any such movement in the price of the share.”

Should You Be Concerned?

You should be only if you own CDE shares. In just nine sessions, the shares climbed over 50%. That’s absurd. Financially, the company is still reeling from losses. Since the pandemic, the company’s sales have been declining. In March 2021, the company reported sales revenue at Rs 853 crore as compared to Rs 2,552 crore in March 2020. It made a net loss of Rs 584 crore in March 2021 against the profit of Rs 1,884 crore (exceptional profit) in March 2020. This highlights that the financial performance is extremely poor and concerning. 

What Lies Ahead?

Nobody knows the real reason behind the stock’s sudden rally. It is rather absurd as there’s no concrete reason, and yet retail investors are pouring their money into the stock. Maybe it’s because the market has been gloomy, and investors want to make some profit with a blind eye. Whatever the reason, the stock appears to be extremely risky to invest in. Until and unless there are any signs of improvement, it should be avoided at all costs.

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