Speciality Posted Strong December Quarter End Results

SRL's revenue increased by 16% to reach Rs 63.49 crore on a YoY basis and 10.55% on a QoQ basis. The other income has also increased to Rs 2.34 crore in Q3FY13 from Rs 1 crore in Q3FY12. Its other income includes dividends on current investments, interest received from banks and profit on sale of investments. 

The company’s revenue increased on account of increasing sales in its 6 newly opened restaurants after March 2012 quarter. Further, its bottomline reached to Rs 6.67 crore in the third quarter of FY13 by showing a jump of 39% on a YoY basis and 30.53% on a QoQ basis.

Moving to the company's expenses, it has shown a rise of 17% to Rs 54.61 crore from Rs 46.73 crore in Q3FY12. Its expenses increased largely due to employee costs, raw material cost and other expenses. New expansions and increase in the number of heads were responsible for increased employee costs, while raw material expenses increased due to higher prices of food products. Moreover, SRL’s lease rent increased by Rs 1 crore in this quarter compared to December 2011.

Further, the company's profit before tax increased by 26% and reached to Rs 8.87 crore in the third quarter this fiscal year against the similar period in FY12. However, the company has posted a higher growth in profit after tax due to lesser tax expenses. However, the operating profit margin is in pressure for the last few quarters, thanks to a rise in food prices. Despite this, the company has managed to grow it net profit margin by 100 basis points to 11% in Q3FY13 on a YoY basis.

Earlier, in May 2012, SRL became public through an IPO by raising Rs 176.09 crore. An amount of Rs 44.24 crore has been used till date. The company has utilised Rs 16.53 crore to open 2 new branches of its restaurants - Mainland China and Oh! Calcutta. The remaining amount is used to repay its term loan facility. 

SRL has plans to open 45 new restaurants by FY2015. Currently, it has a presence in metros and Tier-I cities and to some extent in Tier-II cities. It intends to explore its presence more in Tier-I and Tier-II cities along with metros. We maintain a “hold” suggestion on this counter because of its strong result and planned expansion in the near future.