Coffee Day Enterprises rallies 18% as NCLAT sets aside insolvency proceedings; up over 40% in 2 days

Shares of Coffee Day Enterprises Ltd (CDEL) surged nearly 18 percent in intraday trading on Tuesday, March 4, marking their second consecutive session of strong gains. This follows a 20 percent surge in the previous session after the National Company Law Appellate Tribunal (NCLAT) dismissed insolvency proceedings against the company, boosting investor sentiment.

The case, filed by IDBI Trusteeship Services over an alleged ₹228 crore default, was set aside by a two-member bench of NCLAT’s Chennai panel, providing significant relief to the company that operates the Cafe Coffee Day chain.

NCLAT Ruling Overturns NCLT Order

The NCLAT bench, comprising Justices Sharad Kumar Sharma and Jatindranath Swain, overruled the earlier decision made by the Bengaluru bench of the National Company Law Tribunal (NCLT). The order came in response to a petition by Malavika Hegde, a shareholder and director at CDEL, challenging the August 8, 2024, ruling by NCLT that admitted IDBI Trusteeship’s insolvency plea.

NCLAT had initially granted interim relief by staying the proceedings on August 14, 2024. However, as it failed to pass a final ruling within the Supreme Court’s deadline of February 21, 2025, the proceedings resumed. The appellate tribunal finally delivered its verdict last week, dismissing the insolvency case entirely.

Background of the Insolvency Case

The insolvency proceedings began when IDBI Trusteeship Services Ltd. (IDBITSL) moved NCLT, alleging a default of ₹228.45 crore by CDEL. Following the August 8, 2024, admission of the plea by NCLT, an interim resolution professional was appointed to oversee the company’s operations. CDEL’s board promptly challenged the order at NCLAT, which led to a temporary stay on the insolvency proceedings on August 14, 2024.

However, IDBITSL escalated the matter to the Supreme Court, which directed NCLAT’s Chennai bench to resolve the appeal by February 21, 2025. Following this directive, NCLAT ruled in favor of CDEL, effectively dismissing the insolvency plea and restoring operational control to the company.

Stock Market Reaction

The stock price of CDEL reacted positively to the ruling, rising as much as 17.9 percent to its intra-day high of ₹30.25 on BSE. This is the second straight session of gains with the stock gaining over 40 percent in these 2 sessions together. Before this, the stock endured a prolonged losing streak. The stock had declined for 11 consecutive sessions since January 13, losing 30 percent in that period. In February alone, it fell 18 percent, reversing the 15 percent gains seen in January. Over the past year, the stock has lost 62 percent of its value.

Currently trading at ₹25.65, the stock still remains significantly, over 59 percent below its 52-week high of ₹74.54, recorded in April 2024. However, it has recovered by over 41 percent from its 52-week low of ₹21.38, which it touched on February 24, 2025.

In summary, the dismissal of insolvency proceedings by NCLAT marks a significant legal victory for Coffee Day Enterprises, providing much-needed relief to the embattled company. While the stock has responded positively to the news, it remains far from its previous highs, reflecting investor caution amid lingering concerns over the company’s financial stability. Moving forward, market participants will closely monitor CDEL’s strategy for improving its financial health and sustaining business operations.

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