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An employee prepares coffee for customers at a Cafe Coffee Day outlet in Mumbai, India, November 2, 2015 (representational image).Reuters file

Cafe Coffee Day's (CCD) core coffee business is likely to get a boost with chairman VG Siddhartha's decision to offload the shares he controls in mid-size IT company MindTree, media reports say.

The chairman and managing director of the Bengaluru-based coffee chain made clear his intention to exit the equity of the IT company some time back. Siddhartha, CCD and other companies he controls have about 21 per cent stake in MindTree, which has a market valuation of Rs 14,892 crore at the share price as of Monday noon.

MindTree shares were trading on the National Stock Exchange (NSE) at Rs 904.55 up 17.55 or 1.98 per cent from last week's close. Coffee Day Enterprises (CDE) that owns CCD chain was valued at Rs 5,700 crore as of Monday noon with its shares trading at Rs 291.50, which is down Rs 2.85 or 0,97 per cent from last week's close.

CDE shares are down 18 per cent when compared to its November 2015 IPO price, after briefly rising above the issue price early this month.

The uncertainty in the markets about Siddhartha's plans with the money from MindTree equity sale has so far kept the CDE shares on tenterhooks. But, the scrip's profile should improve once the investment plans firm up.

Market reports say Siddhartha is in advanced talks with L&T Infotech, KKR, Baring Private Equity Partners Asia and Prem Watsa's Fairfax for offloading the shares he controls.

Investors are awaiting an official announcement, according to a Mint report. News reports also suggest that MindTree promoters are reluctant to give up control, which is keeping buyers away.

The sale of the MindTree stake will prove to be a positive development for CDE, as it would lead to value unlocking of the investment for Coffee Day investors, Mint said citing the views of Jigar Shah, Maybank Kim Eng Securities India CEO.

Market observers say the sale of MindTree stake will also lead to the restructuring of CDE, said Shah. Coffee Day said it is evaluating the segregation of the coffee and non-coffee businesses. The board has also approved the appointment of financial, tax and legal advisers to explore the matter.

The market expects better price discovery of CDE once the holding structure is simplified and investors get a chance to invest in its coffee business directly, a report from Maybank said.

Though Siddhartha announced his decision to cash out some time back, he was apparently waiting for a decision from the four founders-—Subroto Bagchi, NS Parthasarathy, Krishnakumar Natarajan and CEO Rostow Ravanan, who together control around 13 per cent stake in Mindtree. But the promoter group rebuffed plans to sell or merge MindTree forcing the hands of Siddhartha.