Indian coffee chain Blue Tokai targets three-fold revenue before deciding on IPO

Brainbees Solutions

19/11/2024 07:52

By Praveen Paramasivam
       CHENNAI, Nov 19 (Reuters) - Indian coffee chain Blue
Tokai is aiming for a nearly three-fold jump in annual revenue
by 2027 before it decides whether to go public, its top boss
told Reuters on Monday.
    Coffee culture is growing briskly in India, with the
affluent in bigger cities increasingly working and holding
meetings in cafes.
    To cash in on India's fast-growing $300 million speciality
tea and coffee cafe market, Blue Tokai plans to operate about
350 cafes within the next three years in cities including
Hyderabad and Chennai, its CEO and co-founder Matt Chitharanjan
said. The firm, backed by Belgian investment firm Verlinvest,
currently has over 130 cafes. 
    The company is targetting a yearly revenue of 10 billion
rupees ($118.5 million) by 2027, Chitharanjan said. Its revenue
run rate, or annual projected revenue, is 3.7 billion rupees
this year.
    Ensuring "healthy" profit margins will make the firm "an
attractive IPO candidate," he said without elaborating.
    While many consumer-facing businesses, such as food and
grocery delivery firm Swiggy  SWIG.NS  and baby products
retailer FirstCry  BRAE.NS  have gone public this year, riding a
stock market boom, an IPO is currently not on Chitharanjan's
mind. 
    "Market conditions will fluctuate and we are more concerned
about reaching our internal goals," he said, adding that
"well-capitalized" Blue Tokai has "patient investors" who are
not pushing for an early IPO.
    India's stock market has cooled from record highs this year,
with the benchmarks logging their worst monthly performance in
October since March 2020.
    Blue Tokai has raised $81 million since its inception in
2013 and competes with Western brands including Starbucks, Costa
Coffee, and domestic rival Third Wave.
    Tata Starbucks, a joint venture between Starbucks and
India's Tata Group, which has over 400 cafes, posted a revenue
of 12.18 billion rupees last year, while Costa Coffee, with more
than 179 cafes, recorded 1.52 billion rupees in revenue in
fiscal 2024.
    Costa Coffee, Starbucks, and McDonald's McCafe have
announced more expansion plans in India. But Blue Tokai is not
concerned.
    "We're not at a stage of the market where there's a lot of
competitive pressure," Chitharanjan said. "It's more about
growing the overall market pie, rather than stealing share from
each other."


($1 = 84.4050 Indian rupees)

 (Reporting by Praveen Paramasivam in Chennai; Editing by
Abinaya Vijayaraghavan)
 ((Praveen.Paramasivam@thomsonreuters.com; +91 867-525-3569;))