In a significant turn of events, Coffee Day shares have witnessed a sharp decline of over 17% in early morning trading, opening at a low of ₹43.35 apiece on the NSE. This rapid decline can be attributed to a recent lawsuit filed by IDBI Trusteeship Services Limited against Coffee Day Enterprises, seeking insolvency proceedings over an alleged default of ₹228 crore. The lawsuit was filed before the National Company Law Tribunal (NCLT) in Bengaluru.
Arun Kejriwal, Founder of Kejriwal Research and Investment Services, explained the market’s reaction, stating, “The plummeting Coffee Day shares are a direct result of IDBI Trusteeship’s application at NCLT, which is seeking insolvency proceedings against the company.”
After the market closed on Friday, Coffee Day Enterprises officially disclosed the lawsuit to Indian stock market authorities, stating, “This is to inform you that an application has been filed against the Company under Section 7 of the Insolvency and Bankruptcy Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy Rules, 2019, by IDBI Trusteeship Services Limited before the National Company Law Tribunal, Bengaluru, for an alleged default of ₹228,45,74,180/-. The Company is seeking appropriate legal advice and will take all appropriate steps to protect its interest in the aforesaid matter.”
Sumeet Bagadia, Executive Director at Choice Broking, expressed his outlook on Coffee Day shares, suggesting potential further downside in the stock. “Coffee Day shares are displaying weakness in their chart pattern. We anticipate that the stock may decline further towards the ₹40 to ₹38 per share range, with resistance encountered at the ₹50 to ₹52 zone.” Bagadia advised shareholders with a high-risk appetite to maintain a stop loss at ₹38, while others may consider an exit strategy, as it may take some time for the stock to recover its lost value.
The Coffee Day share price’s dramatic decline serves as a reminder of the challenges faced by the company in light of the ongoing legal proceedings. Investors and market analysts will closely monitor developments in this case to gauge the potential impact on the company’s future financial stability.