Lets not base our decision based on what p/e investors are doing. They have deep pockets to take risk and even if something goes wrong they will be compensated behind the screen. Listing can be an exit route for p/e investors.
See the total debt level.Consolidated debt of Rs. 3,800 Cr. as of February 15, 2015. d/e 3.90.
The Company faces competition from QSR – McDonald’s, Dominos, Dunkin Donuts, KFC, Pizza Hut, etc in addition to pure coffee chain. Mr Ambaliga who has worked in the Group has commented that the company is incurring losses on coffee shops and it tallies with closure of 175 shops.
They are in the business for the last 15 years and why still losses. Its arms are also making lossess. No dividend history. When such a business with a long existence is still making losses and using IPO money to pay off debts, it is not a good business.
It may be a leader with 1500 outlets ( far ahead of Barista) but whether it makes cashflow that is important. A good business pays off debt by internal accruals and again equity financing is expensive than debt.
I have given the facts and view and it is for the individual to take a call. My single biggest risk factor is debt and would refrain from posting further on this.
Rgds,
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