Buy Speciality Restaurants; target Rs 228: Anand Rathi
Anand Rathi Retail Research is bullish on Speciality Restaurants (SRL) and has recommended buy rating on the stock with a target price of Rs 228 in its research report dated December 19, 2012.
December 21, 2012 / 13:52 IST
Anand Rathi Retail Research is bullish on Speciality Restaurants (SRL) and has recommended buy rating on the stock with a target price of Rs 228 in its research report dated December 19, 2012.
"SRL is the only multi brand fine dining restaurant chain which has been operating in India for the past 18 years. As on Aug 2012, they have 90 restaurants and 12 confectionary outlets spread across 23 cities in India and one city in Bangladesh. Flagship Brands: Mainland China and Oh! Calcutta -- having presence for over 17 years along with Sigree, Machaan, Flame & Grill, Haka, Sweet Bengal. Other brands include - Just Biryani, KIBBEH, Kix, Shack, as well as a confectionary brand.Most of the properties of the company have wide presence pan India and are leased one, which does not put burden for debt raising, to grow and expand. It has good track record of profitable growth. 2 models which are followed, FOCO model (franchise owned and company operated) allows maintaining the consistency in the services as well to enter newer markets which the company may not exploit. COCO model (company owned and operated) for expansion purpose. Cost curve shows it takes 120 days to launch and 6 months thereafter to breakeven.First piloted restaurant will come up in Pune. It is all day bar and restaurant serving Italian/ Mediterranean cuisine. It is targeted at audience in the age group of 19-24 years. The segment has higher margins of 35-40% sales, emanating from liquor sales. It will give higher cover as timing will be longer as it will be open 9am to 12 midnight. Consultants appointed are from UK and recruitments from Top Hotels in India are done.With expansion plans set and in progress, cash on hand and no debt requirement for the same makes the financial position for the company very strong. Good brand name and diversified kitty though authentic Chinese food (Mainland China) being the USP gives an edge over. We see a strong 5 years CAGR growth in top line of 20% and bottom line 38% for the company in the period of FY09-FY14. We value the company on 15xEV/EBITDA for FY14, which gives a target of 228 for next one year. Buy the stock," Anand Rathi research report.What stocks does Morgan Stanley hold? Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.To read the full report click on the attachment 
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