SPECIALITY - Speciality Restaurants Limited Share Price

Management provided a positive outlook for Speciality Restaurants, emphasizing growth despite recent challenges. For the financial year 2025, revenues increased by 8.33% from INR 94.64 crores to INR 102.52 crores, while EBITDA grew by 18.37% from INR 16.54 crores to INR 19.58 crores, and PAT surged by 62% from INR 1.64 crores to INR 2.66 crores. The company's same-store sales growth for the quarter was 5.2%, and for the entire year, it was 2.1%.

Looking forward, management anticipates revenue growth in the range of 10% to 15% for FY26, aligning with their historical growth rate of about 5% alongside new restaurant openings. The reported EBITDA margin is 18.37%, with restaurant-level EBITDA expected to be around 23% once corporate costs are accounted for.

Management highlighted ongoing negotiations for strategic investments and emphasized an expansion strategy focused on their Asia Kitchen brand, while also looking into the Sweet Bengal brand's growth, particularly in the Maharashtra region. They are focusing on enhancing the customer experience and brand presence, showcasing an investment outlook that includes a revamped menu and improved store aesthetics.

Challenges identified included inflation and trained manpower shortages, which they are addressing through partnerships with training institutes. Overall, management expressed confidence in their strategies to enhance profitability and drive continued growth in a competitive environment.

Question 1: "My first question is the growth looks a little muted. Is there any particular reason for some quarters to show a better growth? And how are we looking at the future growth?"
Answer: "We recognize that the growth has been affected by the economic environment, especially in February and March, which saw pressures on discretionary spending. Inflation has also remained steady. However, by controlling expenses, we believe we can maintain profitability, and we anticipate higher revenues when the economic landscape improves."

Question 2: "And what do we see the future outlook? Do we stand still on the guidance or?"
Answer: "Historically, we have grown at about 5%. With new openings planned, we project revenue growth of 10% to 15% for FY '25."

Question 3: "What is the payback period for the capex which we are going to incur for the renovation?"
Answer: "When planning renovations, we aim for a payback period of about 4 to 5 years based on our revised financial evaluations."

Question 4: "Sir, how do you see the growth coming forward, sir? Do you see your Chinese-oriented growing or was there some talk of some acquisition?"
Answer: "We are continuously in talks for strategic investments from our treasury. We're hopeful for good news soon, including possible acquisitions that align with our operational synergies."

Question 5: "What about the cross-branding, sir? We had introduced some Mainland China sauces. Do you continue to focus on them?"
Answer: "Our primary focus is on the Asia Kitchen brand, as we believe it allows synergistic sales with our other brands. We are also utilizing aggregator platforms to boost sales of these sauces, but our main push is for the growth of Asia Kitchen in new mall locations."

Question 6: "Could you shed some light on the wet-led models like Episode One for growth?"
Answer: "We expanded an Episode One unit and are awaiting another property. As soon as it's ready, we plan to open a new location."

Question 7: "So, are we trying to cut down the other brands or expanding?"
Answer: "While we aim to continue operations with profitable brands, our primary expansion focus will be on Asia Kitchen. We are developing a hybrid model to utilize delivery effectively, which aligns with our growth strategy."

Question 8: "What are the major challenges hindering growth?"
Answer: "The biggest challenge is the availability of trained manpower and assessing real estate to ensure profitability. We are actively addressing these challenges through partnerships and our training initiatives."

Question 9: "What is the capital WIP, and when do we expect it to be recognized?"
Answer: "The capital for WIP relates to our building in Calcutta, which we expect to complete within the financial year. This will facilitate our banquets and Dariole business."

Question 10: "Sir, anything specific that happened at Chourangi due to a significant difference in standalone and console?"
Answer: "Chourangi faced reduced customer covers due to the challenging economic environment in London. This resulted in decreased revenues, but we are focused on strategies to regain customer interest and improve performance."