Coffee Day shares snap two-session fall, hit 20% upper circuit today; here's why

Shares of Coffee Day Enterprises Ltd rose sharply in Wednesday's trade, pausing their two-day losing run. The stock surged 20 per cent to hit its upper price band of Rs 51.36 over its previous close of Rs 42.80. Today's sharp jump in the share price came after the company said that the National Company Law Appellate Tribunal (NCLAT - Chennai bench) passed an order terminating Corporate Insolvency Resolution Process (CIRP) proceedings against its subsidiary Coffee Day Global, setting aside a NCLT (National Company Law Tribunal) order.

"This is with reference to the disclosure submitted to the exchanges on July 24, 2023, and August 11, 2023, with respect to the NCLT order dated July 20, 2023, on admission and initiation of CIRP against Coffee Day Global. The said NCLT order was appealed before NCLAT (Chennai). The NCLAT has issued an order dated August 11, 2023, granting stay against the NCLT order," the company stated in a BSE filing.

"In respect to the NCLT order, the lender has assigned its loan of Coffee Day Global to Asset Reconstruction Company (ARC) and filed a joint memo to set aside the NCLT order with NCLAT, Chennai," it further mentioned.

For the unversed, Coffee Day Global was admitted for corporate insolvency based on a petition filed by private lender IndusInd Bank.

On BSE, around 24.01 lakh shares of Coffee Day Ent changed hands today. This was way more than the two-week average volume of 10.97 lakh shares. Turnover on the counter came at Rs 11.65 crore, commanding a market capitalisation (m-cap) of Rs 1,084.99 crore. There were 4,78,756 buy orders against sell orders of nil shares.

Bourses BSE and NSE have put the securities of Coffee Day under the short-term ASM (Additional Surveillance Measure) framework. Exchanges put stocks in short-term or long-term ASM frameworks to caution investors about high volatility in share prices.

On technical setup, the counter was last seen trading higher than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-, 200-day simple moving averages (SMAs). The counter's 14-day relative strength index (RSI) came at 59.41. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-equity (P/E) ratio of 4091.21 against a price-to-book (P/B) value of 0.30.

The scrip has a one-year beta of 1.61, indicating high volatility.

Coffee Day Enterprises is engaged in the trading of coffee beans. The company owns and operates a resort and renders consultancy services. It is also engaged in the coffee business which ranges from procuring, processing and roasting coffee beans to retailing coffee to domestic and overseas customers.

The company has seven subsidiaries such as Coffee Day Global, Tanglin Retail Reality Developments, Tanglin Developments, Giri Vidhyuth (India), Coffee Day Hotels & Resorts, Coffee Day Trading and Coffee Day Econ.

As of June 2023, promoters held a 9.83 per cent stake in the company.

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