Coffee Day Enterprises Limited (CDEL), the parent company of the popular Café Coffee Day chain, has reported a turnaround in its financial performance for the first quarter, alongside significant leadership changes.

Financial Highlights

For the quarter ended June 30, CDEL posted a consolidated net profit of ₹28.18 crore, a substantial improvement from a loss of ₹11.45 crore in the same quarter last year. The company's revenue from operations saw a modest increase of 3% year-on-year, reaching ₹269.32 crore.

CDEL's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) showed remarkable growth, surging by 77% to ₹76.00 crore compared to ₹43.00 crore in the corresponding quarter of the previous year. This significant improvement in profitability was partly attributed to exceptional gains during the quarter.

Exceptional Items Boost Bottom Line

The company's bottom line benefited from exceptional items totaling ₹34.98 crore. This included a one-time gain of ₹18.58 crore from a loan settlement and another ₹16.40 crore gain from the adjustment of proceeds from the sale of invoked shares of Coffee Day Global Limited (CDGL).

Segment Performance

The coffee and related business segment, which includes the Café Coffee Day operations, remained the primary revenue driver. This segment reported revenue of ₹263.38 crore, up from ₹247.50 crore in the same quarter last year. The segment's EBITDA, however, saw a slight decline to ₹35.27 crore from ₹36.06 crore year-on-year.

Leadership Changes

In a significant development, CDEL announced the appointment of Malavika Hegde as the Chairperson of both Coffee Day Enterprises Limited and its material subsidiary, Coffee Day Global Limited, effective immediately. Hegde, who has been serving as a Whole-time Director, will succeed S.V. Ranganath in this role.

The Board has also approved Hegde's re-appointment as Whole-time Director for a five-year term from December 31, 2025, to December 30, 2030, subject to shareholder approval.

Malavika Hegde's Background

Malavika Hegde, a commerce graduate from Mount Carmel College, has been actively involved in the Group's hospitality business since 2008. She has been instrumental in positioning The Serai chain of resorts as a premium brand. Since 2020, Hegde has been leading the company's turnaround efforts, focusing on debt resolution and growth of the Coffee Day brand across cafes, vending machines, and kiosks.

Operational Metrics

As of June 30, Café Coffee Day's retail footprint included 427 cafe outlets and 55,189 vending machines. The company reported an Average Sales Per Day (ASPD) of ₹20,747 for the quarter, with a Same Store Sales Growth (SSSG) of -2.58%.

Debt Restructuring and Recovery Efforts

CDEL continues to work on its debt restructuring process. The company has made progress in settling its dues with certain lenders and is pursuing arbitration proceedings for the recovery of dues from Mysore Amalgamated Coffee Estates Limited (MACEL).

As Coffee Day Enterprises navigates through its financial restructuring and under new leadership, the company appears to be on a path of recovery, showing improved financial performance and strategic focus on its core coffee business.

Coffee Day Enterprises Limited (CDEL) has reported a mixed set of financial results for the first quarter, with modest revenue growth and significant exceptional gains boosting the bottom line.

Revenue and Profitability

The company's consolidated revenue from operations increased by 3% year-over-year to ₹269.32 crores, up from ₹260.07 crores in the same quarter last year. The growth was primarily driven by the coffee and related business segment, which saw revenues rise to ₹263.38 crores, a 6% increase from the previous year.

CDEL's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) saw a substantial jump, rising 77% year-over-year to ₹76.00 crores. This significant increase was largely attributed to one-time gains, including:

• ₹18.58 crores from a loan settlement
• ₹16.40 crores from the sale of invoked shares of Coffee Day Global Limited (CDGL)

The company reported a net profit of ₹28.00 crores for the quarter, a notable turnaround from the ₹11.00 crores loss in the same period last year.

Segment Performance

The coffee and related business segment, which includes CDGL, remained the primary revenue driver:

• CDGL reported a 6% year-over-year increase in net revenue to ₹263.00 crores
• CDGL's EBITDA declined by 4% to ₹37.00 crores compared to the same quarter last year
• As of the end of the quarter, CDGL operated 427 café outlets and 55,189 vending machines
• Same-store sales growth was -2.58% for the quarter

Exceptional Items and Debt Restructuring

During the quarter, CDEL recognized several exceptional gains that significantly impacted its financial results:

1. A gain of ₹18.58 crores from a loan settlement by Coffee Day Hotels and Resorts Private Limited
2. A gain of ₹16.40 crores from the sale of invoked CDGL shares by a lender

The company continues to work on restructuring its debt:

• CDEL has entered into a settlement agreement with debenture holders to settle a loan of ₹205.00 crores in three tranches
• As of the reporting date, the company had paid ₹111.22 crores towards this settlement

Ongoing Challenges

Despite the improved financial performance, CDEL faces several challenges:

1. Recovery of dues of ₹3,372.83 crores from Mysore Amalgamated Coffee Estates Limited (MACEL)
2. Non-compliance with certain debt covenants, including interest and principal repayment defaults
3. Auditors have expressed a disclaimer of conclusion in their limited review report, citing concerns over the recoverability of dues from MACEL and other group companies

Outlook

While Coffee Day Enterprises has shown some signs of recovery with revenue growth and exceptional gains, the company continues to face significant challenges related to debt restructuring and recovery of dues. The management remains focused on resolving these issues and improving the overall financial health of the company.

Investors and stakeholders will be closely watching CDEL's progress in addressing these challenges and its ability to sustain revenue growth in the coming quarters.