Shares of Coffee Day Enterprises Ltd (CDEL), the parent company of the iconic Cafe Coffee Day chain, soared 20% on Monday, hitting their upper circuit limit after a significant legal victory. The National Company Law Appellate Tribunal (NCLAT) in Chennai set aside insolvency proceedings against the company last week, lifting a major overhang that had clouded its financial future. The stock climbed to Rs 25.65 on the BSE and Rs 25.53 on the NSE—its highest level in 52 weeks—marking a dramatic turnaround from four consecutive sessions of five percent lower circuit declines.
The broader market, however, remained subdued, with the BSE Sensex sliding 360.20 points (0.49%) to 72,837.90 and the NSE Nifty dropping 103.05 points (0.47%) to 22,021.65. Against this backdrop, CDEL’s rally stood out as a beacon of relief for investors. The NCLAT’s ruling reversed an earlier decision by the Bengaluru bench of the National Company Law Tribunal (NCLT), which had admitted a plea from IDBI Trusteeship Services Ltd (IDBITSL) in August 2024 over an alleged Rs 228.45 crore default. That order had triggered the Corporate Insolvency Resolution Process (CIRP) and appointed an interim resolution professional to oversee the struggling firm.
CDEL’s suspended board swiftly appealed to the NCLAT, securing a stay on the insolvency process on August 14, 2024. However, IDBITSL escalated the matter to the Supreme Court, which on January 31, 2025, mandated the NCLAT to resolve the appeal by February 21, 2025, or the stay would lapse. When the NCLAT failed to meet this deadline, insolvency proceedings briefly resumed last month, only for the tribunal to deliver its final verdict on February 27, 2025, quashing the NCLT’s order entirely. A detailed judgment is still pending, but the pronouncement has already sparked optimism.
Founded by V.G. Siddhartha in 1996, CDEL grew Cafe Coffee Day into a household name before financial woes emerged following Siddhartha’s death in July 2019. The company has since grappled with a debt burden once estimated at Rs 7,000 crore, resorting to asset sales to stabilize its balance sheet. Beyond cafes, CDEL operates a resort, provides consultancy services, and trades coffee beans, though its core identity remains tied to the coffee chain.
Monday’s stock surge reflects renewed investor confidence, yet challenges linger. Over the past year, CDEL shares have shed 55.17%, and despite the recent uptick, they remain far from their pre-crisis highs. The company has scaled down operations significantly since 2019, focusing on debt reduction and business restructuring under the leadership of Malavika Hegde, Siddhartha’s widow.