Speciality Restaurants surges 16%, stock at 3-yr high on strong Q3 earnings

Shares of Speciality Restaurants hit an over three-year high of Rs 147.65, on rallying 16 per cent on the BSE in Friday’s intra-day trade on back of heavy volumes after the company reported a consolidated profit after tax (PAT) of Rs 11.20 crore in December quarter (Q3FY22). The company had posted a loss of Rs 3.69 crore in a year ago quarter (Q3FY21) and profit of Rs 2.60 crore in previous quarter (Q2FY22).

The stock of restaurants company traded at its highest level since March 2018. Thus far in the month of February, the stock has zoomed 49 per cent, as compared to 0.04 per cent rise in the S&P BSE Sensex. At 10:54 am; the stock quoted 13 per cent higher at Rs 143.25, as against 1.55 per cent decline in the benchmark index. The trading volume at the counter jumped over five-fold. A combined 1.7 million equity shares changed hands on the NSE and BSE.

In Q3FY22, Speciality Restaurants’ revenue from operations jumped 57 per cent year-on-year (YoY) at Rs 88.99 crore against Rs 56.81 crore in Q3FY21.

The company said, currently operations are continuing as permitted by local regulations due to Covid 19 pandemic. As on date most of our restaurants and confectionery stores are operational. Selectively at the local level, various restrictions continue to apply and consequently impact operating performance.

Consequent to Covid-19 pandemic, the Group has been in discussion with the Landlords for its restaurant and confectionery properties for waiver/ discounts on rent and common area maintenance expenses during the lockdown period and also for the period thereafter. The Group has received various concession/rebates from the Landlords with few of them still under discussion, the company said result note.

Thus far in the calendar year 2022, the market price of Speciality Restaurants has surged 65 per cent after CRISIL Ratings has reaffirmed its ‘CRISIL BBB+/Negative/CRISIL A2’ rating on the bank loan facilities of the company.

The ratings continue to reflect SRL’s established market position with strong brands and wide geographic reach, extensive experience of the promoter in the restaurant industry, and its healthy financial risk profile. These strengths are partially offset by susceptibility to economic cycles and exposure to intense competition, leading to subdued profitability. While the revenue and profitability is expected to improve in current fiscal, it is likely to remain lower than expectations constraining the business risk profile, CRISIL Ratings said in rationale.