Company Details

Speciality Restaurants Limited owns and operates restaurants and confectionaries in India and

Bangladesh. The company operates its restaurant outlets under the Mainland China, Oh!

Calcutta, Sigree, Flame & Grill, Machaan, Haka, Shacks, Kix, Kibbeh, Café Mezzuna, Sigree

Global Grill, Hoppipola brand names and confectionaries under the Sweet Bengal brand name.

It also operates Mobifeast, an outdoor catering arm for parties. As of June 30, 2014, it operated

91 restaurants and 15 confectionaries. The company was founded in 1992 and is based in

Mumbai, India.

SRL does not own but operates its restaurants. SRL takes up all its restaurants on lease for a

period of up to 9 years. Each restaurant has an area configured between 3k-6k square foot and

SRL spends about Rs30m on its interiors. SRL targets 30% EBIDTA from each of its restaurants

after accounting for RM cost (20-23% of revenue), rental (15% of revenue), staff (17% of

revenue), and other operating expenses (14% of revenue). Usually, it takes 4 months to set up a

new restaurant and up to 12 months to breakeven. Upon full utilization, a restaurant generates

revenue of Rs50m in a year. Under the franchisee model, SRL continues to operate the

restaurants and appoints its own people to maintain quality control. It charges an initial premium

to a franchise (Rs3 to Rs7m) and receives a royalty of 10% of revenue per year. All the CAPEX

and OPEX of the franchised restaurant are borne by the franchisee.

The company has reported a standalone sales of Rs 70.88 crore and a Net Profit of Rs 2.38

crore for the quarter ended Sep 2014.

Category No. of Shares Percentage

Promoters 26,199,962 55.79

Foreign Institutions 6,382,492 13.59

NBFC and Mutual Funds 5,090,109 10.84

Foreign - OCB 4,997,640 10.64

General Public 3,311,874 7.05

Other Companies 575,405 1.23

Foreign - NRI 313,703 0.67

Others 60,333 0.13

Financial Institutions 21,980 0.05

Directors 4,159 0.01

Market Cap (Rs Cr) – 880.93

Company P/E – 61.11

Industry P/E – 40.83

Book Value (Rs) – 64.72

Dividend (%) – 10 %

EPS (TTM) – 3.07

Dividend Yield (%) – 0.53 %

Face Value (Rs) - 10

Share Holding Pattern Financial Details

Industry Details

Future projections of the restaurant market in India which is mainly comprised of the unorganized and organized restaurant

market. The unorganized restaurant market includes the roadside vendors, Dhabas, Chinese vans and trolleys. The organized

restaurant market includes the Quick Service Restaurants (QSR), the full service restaurants, PBCL (Pubs, Bars, Clubs and

Lounges) and the food courts and kiosks. The report provides the market share and company profiles of major players in

major segments.

The restaurant industry in India, which is mainly driven by the young population aged 15 to 44 years has registered revenues

of INR ~ crores in FY'2013. The industry has witnessed a sound growth which has been fueled by the advent of large number

of national as well as international chains in the organized market. Many international chains such as the Mc Donald's, KFC,

Dominos and Pizza Hut largely have dominated the organized restaurant market in the country over the years. The overall

restaurant market has grown at a CAGR of 6.6% from FY'2008 to FY'2013 and has witnessed an increase in revenues to INR

~ crores in FY'2013 from INR ~ crores in FY'2008.

The changing lifestyles with the increasing nuclear families and a rise in the urbanization in India over the past years have also

supported the growth of the restaurant market in India. Additionally, the customer preference for the cuisine has seen a

transition in India from consuming the traditional Indian food to trying out different cuisines such as the Chinese, Italian and

Mexican. Due to the growing exposure to the international cultures and lifestyles, the Indian population has started developing

their tastes and is reaching out to restaurants more often which offer different cuisines apart from Indian cuisine. This change

in the taste preference of the people in India has motivated many international and Indian players to expand their reach in the

Indian restaurant market.

The Quick Service Restaurants (QSR) and the casual dining restaurants account for a major share of the revenues of the

organized chain market in India. The QSR's and the casual dining restaurants together contributed a market share of 80.6% in

FY'2013 to the organized restaurant chain market. It is estimated that Indian restaurant market revenues will reach INR crores by FY'2018 and is expected to grow at a CAGR of 10.9% during FY'2013 to FY'2018 from revenues of INR ~ crores in FY'2013. The revenues are estimated to be largely driven by the increase in the disposable incomes and changing food habits of the people.

Balance Sheet

Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

Sources Of Funds

Total Share Capital 46.96 46.96 35.22 34.94 1.71

Equity Share Capital 46.96 46.96 35.22 34.94 1.50

Share Application Money 0.00 0.00 0.00 0.00 4.00

Preference Share Capital 0.00 0.00 0.00 0.00 0.21

Reserves 256.96 243.56 79.65 62.68 64.96

Networth 303.92 290.52 114.87 97.62 70.67

Secured Loans 0.62 0.10 16.71 6.67 17.92

Unsecured Loans 0.00 0.00 5.58 5.87 5.76

Total Debt 0.62 0.10 22.29 12.54 23.68

Total Liabilities 304.54 290.62 137.16 110.16 94.35

Application Of Funds

Gross Block 185.80 148.72 122.68 102.76 89.74

Less: Accum. Depreciation 79.99 64.05 49.89 40.22 28.16

Net Block 105.81 84.67 72.79 62.54 61.58

Capital Work in Progress 35.34 17.44 15.15 7.10 9.89

Investments 110.94 136.44 15.03 25.07 5.55

Inventories 4.74 2.83 2.02 1.98 1.25

Sundry Debtors 19.65 11.46 7.38 4.96 2.11

Cash and Bank Balance 13.08 9.80 4.71 4.78 3.83

Total Current Assets 37.47 24.09 14.11 11.72 7.19

Loans and Advances 65.22 63.55 55.35 41.75 29.94

Total CA, Loans & Advances 102.69 87.64 69.46 53.47 37.13

Deferred Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 44.31 28.61 33.84 35.81 19.80

Provisions 5.92 6.96 1.44 2.22 0.00

Total CL & Provisions 50.23 35.57 35.28 38.03 19.80

Net Current Assets 52.46 52.07 34.18 15.44 17.33

Total Assets 304.55 290.62 137.15 110.15 94.35

Contingent Liabilities 28.28 25.97 27.45 31.34 19.15

Book Value (Rs) 64.72 61.87 32.61 27.94 443.08

Profit and Loss Account

Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

Income

Sales Turnover 263.85 226.92 196.23 173.11 128.81

Net Sales 263.85 226.92 196.23 173.11 128.81

Other Income 9.84 9.16 2.71 1.84 2.48

Total Income 273.69 236.08 198.94 174.95 131.29

Expenditure

Raw Materials 75.91 60.96 51.02 44.52 0.00

Power & Fuel Cost 13.99 11.11 8.06 6.74 0.00

Employee Cost 61.25 51.28 42.31 33.04 26.36

Other Manufacturing Expenses 0.00 0.00 0.00 0.00 36.46

Miscellaneous Expenses 78.74 66.83 57.33 50.95 39.55

Total Expenses 229.89 190.18 158.72 135.25 102.37

Operating Profit 33.96 36.74 37.51 37.86 26.44

PBDIT 43.80 45.90 40.22 39.70 28.92

Interest 0.07 0.50 2.66 1.32 1.72

PBDT 43.73 45.40 37.56 38.38 27.20

Depreciation 19.03 14.93 12.87 14.30 11.44

Other Written Off 0.00 0.00 0.00 0.00 0.00

Profit Before Tax 24.70 30.47 24.69 24.08 15.76

Extra-ordinary items 0.00 0.00 0.00 0.00 0.00

PBT (Post Extra-ord Items) 24.70 30.47 24.69 24.08 15.76

Tax 5.80 7.07 7.44 8.06 4.57

Reported Net Profit 18.89 23.41 17.24 16.02 11.19

Total Value Addition 153.97 129.22 107.71 90.73 102.37

Equity Dividend 4.70 4.70 0.00 0.00 0.00

Corporate Dividend Tax 0.80 0.80 0.00 0.00 0.00

Per share data (annualised)

Shares in issue (lakhs) 469.58 469.58 352.18 349.36 15.00

Earning Per Share (Rs) 4.02 4.99 4.90 4.59 74.57

Equity Dividend (%) 10.00 10.00 0.00 0.00 0.00

Dividend History

Index and Company Comparison

Company Forecast

PBIT – 5.45 v/s 37.51

RoCE – 8.13 v/s 10.65

RoE – 6.36 v/s 11.55

Net Profit Margin – 6.90 v/s 9.91

Return on net worth – 6.21 v/s 8.05

D/ E Ratio – Nil

Interest Cover – 334.72 v/s 62.33

Current Ratio – 2.04 v/s 2.46

Reserves – 256.96 cr v/s 243.56 cr

PAT – 18.89 cr v/s 23.41 cr

Total assets – 304.55 cr v/s 290.62 cr

Net sales – 273.69 cr v/s 236.08 cr

Book Value – 64.72 cr v/s 61.87

Days BSE NSE

30 187.03 187.11

50 184.49 184.61

150 161.79 161.88

200 158.06 158.18

Important Ratios Simple Moving Average

Recommendations

Buy Speciality Restaurants Ltd. at current or

lower market levels

Reasons for the recommendations are :

Availability of established brands and chain of restaurants.

Huge gap in per capita expenditure on restaurants when compared with other

developing countries.

Increase in disposable income among the targeted customers of the company.

Zero debt company and its aggressive expansion plans.

Unique business model includes leasing of restaurant space.

Franchising will increase the revenue to a notable extent.