CDGL reported a healthy quarter for core café business even as revenue growth was muted due to lower export revenues. Strong growth in ASPD per café up 15% y-o-y, key operational metric was the key positive this quarter and drives a modest 4-5% increase in our EBITDA estimates for CDGL. Overall risk-reward remains reasonable at current levels; retain Add with revised TP of Rs 280 (from Rs 255) as we roll-over to March 2019.
CDGL reported 4% y-o-y growth in net operating revenues to Rs 4.51 billion dragged down by 9% decline in exports business (higher salience in Q4); we note retail gross revenues posted robust 16% y-o-y growth aided by 15% growth in café business.
ASPD. Better revenue mix (drove 405 bps expansion in GM) and leverage drove robust 31% y-o-y growth in EBITDA to Rs 632 million; we note EBITDA margin expanded 285 bps y-o-y partially dragged down by higher rent expense (up 16% yoy; 120 bps). Recurring PAT grew 36% y-o-y to Rs 93 million despite sharp jump in ETR and 34% y-o-y drop in other income. For FY2017, CDGL posted revenue, EBITDA and PAT growth of 12%, 8% and 8% y-o-y respectively.
CDEL’s net operating income grew 6% y-o-y to Rs 8.94 billion, driven by robust growth in coffee business (up 11% y-o-y) and logistics business (up 22% y-o-y). EBITDA grew 16% y-o-y aided by 140 bps expansion in EBITDA margin on account of 100 bps expansion in GM and 60 bps reduction in staff costs. PAT turned positive at Rs 150 million (versus loss of Rs 20 million y-o-y in Q4FY16).
ASPD in café business saw robust 15% y-o-y growth (up 1% q-o-q) to Rs 14,898 and SSSG came in at 6.9%; we note ASPD has improved meaningfully in H2FY17 driving 8% y-o-y growth to Rs 14,418 for full year FY2017. The company added 28 net stores during the quarter taking the full year tally to 75 net stores (135 gross stores) to 1,682 cafes. Vending business continued to perform well with net addition of 1,832 machines for the quarter (qoq); we note for FY2017 the management exceeded its target of 6,000 net additions ending the year with net addition of 6,400+ vending machines.
Good performance in core café business and robust ASPD increase drive a modest 4-5% increase in our FY2018-19 EBITDA estimates.