*CCD: Founder quits MTCL board to focus on coffee business* This is a good development for Coffee Day Enterprises (CCD). Reportedly, CCD founder V G Siddhartha has quite the board of Mindtree Ltd (MTCL), a mid-sized software company based in Bangalore and stated that he wishes to focus more on his coffee business. CCD and its subsidiary Coffee Day Trading collectively hold 16.55% in MTCL which is valued at INR22b as per the latest market capitalization of MTCL. V G Siddhartha owns an additional 3.36% in MTCL. CCD and V G Siddhartha bought shares in MTCL in 2011-12 from its founding Chairman Ashok Soota when he left the company (then company market cap was INR24b). Market rumors suggest that this may be a precursor to stake sale in MTCL by CCD and its founder. It could be a big positive in that case because it will sharply reduce the current net debt of CCD which stands at INR28b. Recently, V G Siddhartha family bought nearly 2.5% stake in CCD (held 51.3% prior to that) at market price when PE investor KKR sold. We like CCD due to its cafe business which is a market leader in India and solid investments. The stock is undervalued based on SOTP. We maintain BUY and TP of INR400.
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