440% jump in 2023! What’s brewing at Ashish Chugh’s latest small-cap stock pick

A small-cap company has been buzzing on Dalal Street for two reasons. Firstly, shares of the company have delivered a mindboggling 441 per cent return in the ongoing calendar year till September 1. Secondly, a well-known Delhi-based small-cap stock picker Ashish Chugh picked more than 1 per cent stake in the company during the June quarter. The company is Intellivate Capital Ventures. The latest updates show that the company is all set to turn into a quick service restaurant (QSR) business.

The company’s annual report for FY21-22 showed that Intellivate Capital Ventures in May 2022 decided to acquire a 95 per cent stake in Boutonniere Hospitality Private Limited by way of cash consideration and share swap.

Data available with Prowess IQ showed that Boutonniere Hospitality holds an 88.35 per cent stake in the coffee chain Barista Coffee Company and 100 per cent in Kaizen Restaurants which owns Kylin Experience, Kylin Express, Kylin Skybar and Wanchai. In 2014, Lavazza sold the coffee shop chain to Boutonniere Hospitality, formerly known as Carnation Hospitality.

According to reports, Barista is India’s second-largest coffee chain operator with 350 outlets after Café Coffee Day which had 1,384 outlets as of February 2023. The company is now aiming to reach a 500-store count by 2025. Barista is also present in Maldives and Sri Lanka, where it is the largest coffee chain.

On asking why you acquired 1.60 per cent stake or 6,87,264 share in Intellvate Capital, Ashish Chugh said, “I believe Intellivate Capital’s acquisition of Boutonniere Hospitality, which owns Barista Coffee chains together with Kylin Experience, Kylin Express and Wanchai, may just be the beginning. There is immense potential for growth through scale up of business – the opportunities lie in their bringing in other national and international food chains under its fold."

"Investing in Intellivate Capital is akin to investing in a startup company and like most start up founders, the promoters of Intellivate too may be evaluating various options and opportunities for growth from time to time that may fit into their business model and which can create value for its shareholders. There may be many other surprises which we may not be aware of or anticipate today that may unfold in the future. This is my personal view and not a recommendation,” Chugh said.

Shares of the company have jumped to Rs 62.96 on September 1 from Rs 11.63 on January 2, 2023. The scrip has jumped 287 per cent so far against an average share price of Rs 16.26 in the June quarter.

Intellivate Capital Ventures in August 23 made preferential at Rs 25 to promoters and non-promoters. A significant portion of shares in this preferential issue is being given to Saurabh Khanijo and some of the corporate entities controlled by him. Saurabh Khanijo is the owner of the Welgrow Group and is known for creating and offering innovative restaurant concepts.

The company on August 19 informed bourses that a meeting of the board of directors is scheduled to be held on September 5 to consider and approve the variation in the terms of conversion of fully paid 10 per cent redeemable non-convertible non-cumulative preference shares into compulsory convertible preference shares and allotment of equity shares upon conversion of preference shares and other related matters.

Earlier, the company in June had considered changing its name from Intellivate Capital Ventures to Barista Global Foods. However, the same was not approved by the requisite majority. One possible reason for dropping the name may be that since the company has aspirations to bring in multiple brands under its fold, the name Barista could have been a limiting factor since it is perceived only as a Coffee brand.

For the financial year ended March 31, 2023, Intellivate Capital Ventures reported revenue of Rs 62 crore and net profit of Rs 3.48 crore. For the quarter ended June 23, revenue came at Rs 34.46 crores and net profit at 2.42 crore. The company reported a revenue of Rs 0.21 crore and net loss of Rs 0.11 crore in the same quarter last year.

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