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Stock Analysis – Speciality Restaurants

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Business

Speciality Restaurants is a fine dining chain which has presence in 25 cities through its popular brands Mainland China, Oh! Calcutta, Global Grill, Sigree Global Grill, Mezzuna and Hoppipola.

Over the next 2 years, it plans to add 25-30 outlets to its existing chain of 90 restaurants and 16 confectionaries.

Financials

The company’s flagship brand Mainland China contributes 58 %  to its total revenues.

The company’s net revenue during the period grew to Rs 214.8 crore while its operating profit margin was stable at 21.9 per cent.

compounded annual growth rate (CAGR) of 13.6 per cent in the past three years despite a fall in domestic discretionary spending.

The company has managed a large part of this expansion from the proceeds of its initial public offering ( IPO) in 2012 through which it raised Rs 176 crore. Despite this expansion, the company has a debt-equity ratio of less than one and has cash and cash equivalents of Rs 120 crore.

Mainland China has consistently delivered an operating profit margin of 29-30 per cent.  CFO Rajesh Mohta said: “We are going to bring Flame & Grill and Machaan under our Global Grill brand, which has been renamed as Sigree Global Grill. For us, it makes more sense to have Global Grill brand, which has a fixed price menu and also has an operating profit margin of close to 24 per cent.”

The company has a turnaround ratio, which indicates how many times a customer frequents a joint, of 1.5 and an average per cover of Rs 675.

Investors

  • Promoters – 60%
  • SAIF  Mauritius  –  15%
  • Reliance MF – 5.2%
  • Azim Hasham Premji  – 1.35%

PE Firm – Saif picked up about 12 per cent stake in the company in early 2008 and had then valued the company at about 450 crore.  In Dec 2013, SAIF picked up 1.5 million shares at Rs 125 per share.

  • Current Market Price – Rs 118
  • Current Market Cap – Rs 557 crore
  • 52 Week Low  / High  –  Rs 101  /  Rs 191

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