*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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