Investor`s Eye

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February 11, 2015
Index
 Stock Update >> Capital First
 Stock Update >> Triveni Turbine
 Stock Update >> Technocraft Industries (India)
 Stock Update >> Speciality Restaurants
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investor’s eye
stock update
Capital First
Reco: Buy
Stock Update
Strong operating performance, PT revised to Rs 485
Key points
Company details
Price target:
Rs485
Market cap:
Rs3,460 cr
52 week high/low:
Rs431/131
NSE volume:
(no. of shares)
CMP: Rs416
2.7 lakh
BSE code:
532938
NSE code:
CAPF
Sharekhan code:
CAPF
Free float:
(no. of shares)
2.4 cr
Shareholding pattern
 Capital First reported a strong set of numbers for Q3FY2015 as the net profit
grew by 196% YoY led by a 56% Y-o-Y expansion in the net interest income. The
non-interest income also showed a strong growth of 76% YoY, mainly contributed
by the fee income. The AUM were up by 29% YoY to Rs11,695 crore.
 Despite the strong growth, the gross NPAs saw a marginal uptick (up 7BPS QoQ
to 0.63% of advances) and remained at a healthy level. The company exited
the gold loan business due to a weak growth outlook. The provisions increased
by 67% YoY due to an increase in loans and higher standard asset provisioning of
Rs4.4 crore (as per the RBI’s revised norms for NBFCs).
 Capital First is likely to sustain a strong growth in retail and SME segments and
is likely to benefit from a drop in interest rates and revival in consumption.
Given the strong management bandwidth and stringent risk management
procedures, the asset quality may remain healthy. We expect the earnings to
grow at a CAGR of 57% over FY2014-17 and the return ratios to improve
significantly from FY2016 onwards. We value the company at 2.5x FY2017E
book value which results in a price target of Rs485. We maintain our Buy rating
on the stock.
Results
Rs cr
Particulars
Price chart
Q3FY15
Q3FY14
YoY %
Q2FY15
QoQ %
Interest income
342.2
255.1
34.1
318.0
7.6
Interest expense
204.6
166.8
22.7
192.8
6.1
Net interest income
137.6
88.3
55.8
125.2
9.9
Non-interest income
Net total income
37.9
21.5
76.3
29.6
28.0
175.5
109.8
59.8
154.8
13.4
Operating expenses
99.6
74.6
33.5
91.3
9.1
Pre-provisioning profit
75.9
35.2
115.6
63.5
19.5
Provisions
30.6
18.3
67.2
21.8
40.4
Profit before tax
45.3
16.9
168.0
41.7
8.6
Tax
15.4
6.8
126.5
14.7
5.0
Profit after tax
29.9
10.1
196.0
27.0
10.6
Key items
AUM
Price performance
(%)
1m
3m
6m 12m
11,695
9,071
28.9
11,047
5.9
Wholesale
1,871
1,846
1.4
1,768
5.9
Retail
9,824
7,225
36.0
9,279
5.9
8,857
6,675
32.7
8,310
6.6
Gross NPLs
0.63
0.49
14 BPS
0.56
7 BPS
Net NPLs
0.01
0.19
-18 BPS
0.01
0 BPS
CAR
20.2
21.4
-120 BPS
21.0
-80 BPS
C/I ratio
56.8
67.9
-1119 BPS
59.0
-223 BPS
Loan Book
Key ratios (%)
Absolute
6.0
9.3
52.5 199.8
Relative
2.6
to Sensex
7.4
35.8 111.9
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Strong growth in net interest income
Asset quality stays healthy
Capital First continued to report a strong growth in the
net interest income, which increased by 56% year on year
(YoY), in line with our estimate. The growth was contributed
by a strong rise in loans and an expansion of 20 basis points
(BPS) quarter on quarter (QoQ) in the margins. In line with
a reduction in the wholesale borrowing cost, the cost of
funds moderated. In addition, the focus on high-yielding
products contributed to healthy margins.
Despite the strong growth, the gross non-performing assets
saw a marginal uptick (up 7BPS to 0.63% of the total
advances) QoQ and remained at a healthy level. The company
exited the gold loan business due to a weak growth outlook.
The provisions increased by 67% YoY due to an increase in
the loans and higher standard asset provisioning of Rs4.4
crore (as per the Reserve Bank of India [RBI]’s revised norms
for the no-banking finance companies [NBFCs]).
Asset quality
Net interest income (Rs cr)
Robust growth in fee income
The non-interest income grew at a strong pace (up 76% YoY)
mainly contributed by the fee income. The income from
assignment transaction grew by 72% YoY to Rs5 crore. The
operating expenses increased by 34% YoY due to a pick-up in
the retail business and expenses on assignment transaction.
AUM up 29%, SME and retail loans continue to grow at
strong pace
Led by a strong growth in the retail, and small and medium
enterprise (SME) loans (which form 84% of the portfolio)
the assets under management (AUM) grew by 29 % YoY to
Rs11,695 crore. The loan book also grew at 33% YoY which
contributed to the growth in the operating income. From
a segmental perspective, the consumer durable & twowheeler segment grew by 110% while the SME mortgage
segment delivered a growth of 34%. Given the company’s
specialisation in the SME mortgage and increasing market
share in the retail loan space, we have built in a loan
growth of 26% compounded annual growth rate (CAGR)
for FY2014-17.
Fee income (Rs cr)
Asset under management (Rs cr)
Valuation and outlook
Capital First is likely to sustain a strong growth in retail
and SME segments and is likely to benefit from a drop in
interest rates and revival in consumption. Given the
strong management bandwidth and stringent risk
management procedures, the asset quality may remain
healthy. We expect the earnings to grow at a CAGR of
57% over FY2014-17 and the return ratios to improve
significantly from FY2016 onwards. We value the company
at 2.5x FY2017E book value which results in a price target
of Rs485. We maintain our Buy rating on the stock.
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Financials
Profit and loss statement
Particulars
Net interest income
Rs cr
FY13
FY14
FY15E
FY16E
245
328
461
597
768
80
88
105
124
146
Non interst income
Net total income
325
Operating expenses
416
566
721
302
344
403
477
80
114
222
318
438
Provision
22
49
70
92
118
Profit before tax
58
65
153
226
320
Exceptional items
15
-6
-
-
-
Tax
10
6
43
66
94
Reported Profit after tax 63
53
110
160
226
Adj. Profit after tax
58
110
160
226
Particulars
Per share data (Rs)
Reported earnings
915
245
Balance sheet
Particulars
FY17E
Pre-provisioning profit
48
Key ratios
FY13
FY14
FY15E
FY16E
FY17E
70
82
82
82
82
Reserves and surplus 890
1,089
1,171
1,294
1,467
Share capital
Networth
961
1,172
1,253
1,376
1,549
6,230
8,422
10,275
12,398
15,387
344
538
603
675
756
7,535
10,132
12,131
14,449
17,692
33
28
30
33
37
1
347
313
297
300
Loans and advances
5,912
7,323
9,341
11,808
14,724
Current assets
1,574
2,411
2,430
2,294
2,614
Deffered tax assets
9
17
17
17
17
Other assets
(incl goodwill)
6
6
0
0
0
7,535
10,132
12,131
14,449
17,692
Borrowings
Current liabilities
and provisons
Total Liabilities
Net block
Investments
Total Assets
FY16E
FY17E
6.4
13.4
19.6
27.5
6.9
136.4
7.1
142.8
13.4
152.8
19.6
167.8
27.5
193.9
Adj. book value
Dividend
135.4
1.8
141.3
2.0
152.6
3.0
167.6
3.9
188.6
5.5
14.1
14.7
15.3
15.0
15.0
Cost of funds
Net interest margins
9.1
4.7
8.8
5.0
8.7
5.5
8.7
5.6
8.7
5.8
Operating ratios (%)
Interest expended/
Interest earned
66.3
66.3
63.8
62.3
61.3
75.4
72.7
60.7
55.9
52.1
24.7
21.1
18.5
17.2
16.0
Return ratios (%)
RoAE
7.0
4.9
9.1
12.2
15.4
RoAA
Assets/Equity (x)
1.0
7.8
0.6
8.6
1.0
9.7
1.2
10.5
1.4
11.4
Dividned yield
Growth ratios (%)
0.4
0.5
0.7
0.9
1.3
56.6
-54.0
-40.4
33.9
41.7
-16.6
40.6
95.7
109.0
29.4
43.1
45.9
28.7
37.7
40.7
Advances
Borrowings
33.0
42.0
23.9
35.2
27.6
22.0
26.4
20.7
24.7
24.1
Valuation ratios (x)
P/E
Net interest income
Pre-provisioning profit
Profit after tax
Assets
FY15E
9.0
Cost to income
Non-interest income/
net total income
Liabilities
FY14
Adj. earnings
Book value
Spreads (%)
Yield on funds
Rs cr
FY13
46.4
64.8
31.0
21.3
15.1
P/BV
P/ABV
3.0
3.1
2.9
2.9
2.7
2.7
2.5
2.5
2.2
2.2
Asset quality (%)
Gross NPA
0.1
0.5
0.7
0.8
1.0
Net NPA
0.0
0.1
0.2
0.2
0.3
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Triveni Turbine
Reco: Buy
Stock Update
Growth outlook remains intact, maintain Buy
Key points
Company details
Price target:
Rs135
Market cap:
Rs3,510 cr
52-week high/low:
CMP: Rs106
Rs126/52
NSE volume:
(No of shares)
86,367
BSE code:
533655
NSE code:
TRITURBINE
Sharekhan code:
TRITURBINE
Free float:
(No of shares)
9.9 cr
Shareholding pattern
 Deferment of some deliveries led to lower than expected revenues: In
Q3FY2015 Triveni Turbine Ltd (TTL) reported a lower than expected growth of
7% YoY in its stand-alone revenues owing to a deferment of delivery of turbines
worth Rs30 crore which would be booked in Q4FY2015. Consequently, the OPM
was marginally lower at 21.1%. But the PAT increased to Rs23.6 crore (up 13.8%
YoY), which was in line with our expectation.
 Strong order book; outlook robust: On a stand-alone basis, it has reported an
order inflow of about Rs160 crore taking the order book to Rs610 crore with a
strong growth in export orders. The order booking in the joint venture with GE
was also healthy with a consolidated order book of Rs770 crore. More
importantly, the company indicated an inquiry pipeline of over 7,500MW spread
across multiple countries. Thus, the management is confident of achieving a
much better financial performance in Q4FY2015 and in the next couple of years.
 Maintain Buy with a price target of Rs135: We continue to like the stock for
its strong competitive positioning, international marketing efforts, robust order
backlog, margin profile, shorter execution cycle and healthy balance sheet (it
is a debt-free company with superior return ratios). The company continues to
look attractive on the valuation front at 19x FY2017E consolidated earnings
per share. That is a 25-30% discount to its nearest peers like Thermax. We
maintain our Buy rating on the stock with a revised price target of Rs135 (at
24x FY2017E EPS).
Price chart
Results
Rs cr
Particulars
Q3FY15
Q3FY14
YoY %
Q2FY15
Income from operations
150.2
Other operating income
0.3
Operational income
140.8
6.7
155.6
-3.5
0.1
200.0
0.2
87.5
150.5
140.9
6.8
155.8
-3.4
Total expenditure
118.7
109.5
8.4
120.9
-1.8
Operating profits
31.8
31.3
1.5
34.8
-8.8
Other income
Price performance
(%)
Absolute
1m
3m
6m 12m
-4.7
16.2
20.4
92.4
Relative -7.7
to Sensex
14.1
7.3
36.0
QoQ %
6.7
2.2
209.3
4.6
46.5
EBIDTA
38.5
33.5
14.9
39.4
-2.4
Interest
0.1
0.1
-11.1
0.0
300.0
Adjusted PAT
23.6
20.7
13.8
23.9
-1.1
Reported PAT
23.6
20.7
13.8
23.9
-1.1
21.12
22.2
22.36
PAT margin
15.7
14.7
15.3
Tax rate
31.5
31.2
32.5
Ratio (%)
Operating margin
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Valuations (consolidated)
Particulars
FY13
FY14
FY15E
Net sales (Rs cr)
665.3
515.4
706.3
-
-22.5
37.0
Y-o-Y growth %
Operating margin (%)
FY16E
972.3 1,402.6
37.7
44.3
23.1
19.5
20.6
23.6
23.6
Net profit (Rs cr)
104.7
68.0
95.3
136.2
182.7
Adjusted EPS (Rs)
3.2
2.1
2.9
4.1
5.5
Y-o-Y growth %
international market. The share of export turnover in the
AM turnover was 28% during M9FY2015 and it has grown
about 100% on a yearly basis. The mix of product and AM
turnovers also improved from 21% in Q3FY2014 to 25% in
the stand-alone Q3FY2015 revenues. In the past few years
TTL has undertaken the refurbishment of larger turbines
and successful completion of these orders should help
the company to get more orders in this new segment.
FY17E
-35.1
40.3
42.8
34.2
PER (x)
33.1
51.0
36.3
25.4
19.0
P/B (x)
25.1
19.8
12.8
8.5
5.9
EV/EBIDTA (x)
20.3
30.3
20.9
13.7
9.5
RoCE (%)
-
54.3
55.7
58.2
56.9
RoNW (%)
-
43.4
42.9
40.3
36.7
Increasing contribution from AM business to support margin expansion
Strong order booking during the quarter
The stand-alone order inflow remained strong at Rs160
crore (up 14% YoY and 3% sequentially) with the high-margin
after-market (AM) segment accounting for 24% of the orders
and exports accounting for 40% of the orders. The standalone order book stood at Rs610 crore with about 10%
contribution from the AM segment. The share of exports in
the stand-alone order book went up to 33% led by a good
demand from renewable and waste heat recovery projects.
The consolidated order book stood flat on a sequential
basis at Rs770 crore of which Rs230 crore of orders were
from the joint venture with GE. On a consolidated basis,
the contribution of exports to the total order book went
up to about 60% from the past levels of 20-30% in Q2FY2015.
The company indicated that the finalisation of orders in
the domestic market is yet to pick up which resulted in
sluggishness in the domestic order booking.
Management maintains robust growth outlook for
coming years
Backed by a strong order inflow from the overseas market
and the increasing approval of its prototypes by the
international clients, the company is expecting a 30-35%
year-on-year (Y-o-Y) growth in the revenues as well as
earnings on a consolidated basis over the next few years.
Any pick-up in the domestic capital expenditure activity
would be an added boost. In order to expand its highmargin (as high as 35-40%) AM segment globally, the
company is planning to open a few service centres
especially in the UK (mainly to cater to the European
markets) and Dubai.
Increasing book/bill ratio
Estimates fine-tuned, earnings forecast remains largely
unchanged
We have increased our stand-alone revenue estimates by
5-10% for the projected period to accommodate the good
order inflow in the AM and export segments. However,
we have slightly lowered our revenue estimates for the
JV especially for FY2015 as the execution cycle is now
stretching beyond one year (14-18 months) for large
turbine orders. Overall, our earnings estimates remain
largely the same. We are expecting a compounded annual
growth of 39.6% in its revenues and that of 39% in its
earnings over FY2014-17.
Exports from AM segment pick up
The turnover of the AM business increased by 33% YoY
during M9FY2015 as the company achieved some
breakthrough orders in the refurbishment space from the
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Technocraft Industries (India)
Reco: Buy
Stock Update
Strong Q3, valuation still appealing; retain Buy
Key points
Company details
Price target:
Rs270
Market cap:
Rs728 cr
52-week high/low:
CMP: Rs234
Rs235/75
NSE volume:
(No of shares)
41,987
BSE code:
532804
NSE code:
TIIL
Sharekhan code:
TIIL
Free float:
(No of shares)
0.8 cr
Shareholding pattern
 In Q3FY2015, Technocraft Industries India Ltd (TIIL) reported a very strong
earnings growth of around 58% YoY to Rs22 crore, which was ahead of our
estimate. The strong earnings growth was driven by the scaffolding business
(whose PBIT almost doubled backed by a 53% revenue growth and a 282-BPS
margin expansion) and a turnaround in the yarn business. The high-margin drum
closure business continued to show a steady double-digit growth in Q3.
 The management expects to sustain the growth momentum in the scaffolding
business while the growth in the drum closure business could moderate to mid
single digit-levels. The garment business is expected to see traction in the
coming days due to the recent upgradation of its facilities. Moreover, it is
evaluating a few inorganic growth opportunities in the drum closure and IT
space which could give further impetus to growth.
 Given the improving outlook across business segments and the potential upside
from the utilisation of free cash on book to achieve inorganic growth in related
areas, we continue to retain our positive stance on the stock in spite of a close
to 35% appreciation in its price since our initiation report in August 2014. In the
terms of valuations, it is available at attractive multiples of 7x FY2016E and 6x
FY2017E earnings. The strong balance sheet (net cash and investment positive)
and healthy cash flow generation are also comforting factors. Therefore, we
retain our Buy recommendation on the stock with a price target of Rs270.
Results
Rs cr
Particulars
Price chart
Q3FY15
Q3FY14
YoY %
Q2FY15
Revenue
217.2
186.2
17
184.6
18
Net raw material
126.2
108.3
17
102.2
23
Employee exp.
11.4
9.8
17
11.0
4
Other exp.
40.9
53.6
-24
43.2
-5
Operating profit
38.7
14.5
167
28.2
37
2.1
3.5
-40
3.5
-41
Other income
Price performance
(%)
Interest
1.1
1.0
13
1.4
-20
Depreciation
5.6
6.0
-6
5.1
10
PBT
34.0
11.0
210
25.2
35
Tax
13.2
3.6
267
8.0
65
Reported PAT
20.8
7.4
182
17.2
21
(1)
(7)
-79
(1)
-4
Adj. PAT
22.2
14.1
58
18.6
19
Adj. EPS
7.0
4.5
58
5.9
19
OPM
17.8
7.8
1004.3
15.3
251.7
NPM
10.2
7.5
266.3
10.1
11.6
Tax rate
38.8
32.8
607.9
31.8
706.3
EO
1m
3m
6m 12m
Absolute 29.2
17.0
33.9 160.7
Relative 25.1
to Sensex
14.9
19.2
84.2
QoQ %
Margins (%)
YoY BPS
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Valuations
Particulars
FY13
FY14
FY15E
FY16E
FY17E
Net sales (Rs cr)
809
Y-o-Y growth (%)
24.1
Operating profit (Rs cr) 122
OPM (%)
15.1
Adj. net profit (Rs cr)
71
Adj. EPS (Rs)
22.7
Growth (YoY) %
409.6
PER (x)
10.2
P/B (x)
1.5
EV/EBIDTA (x)
4.6
RoCE (%)
19.8
RoE (%)
15.2
Div yield (%)
1.3
1,045
29.2
135
12.9
104
33.1
45.9
7.0
1.3
4.3
20.0
19.5
2.2
1,039
(0.6)
140
13.5
89
28.3
(14.4)
8.2
1.1
4.1
17.6
14.8
2.2
1,183
13.9
172
14.6
111
35.1
24.2
6.6
1.0
3.3
19.5
16.2
2.7
1,337
13.0
194
14.5
126
40.1
14.1
5.8
0.9
2.7
19.9
16.3
3.1
The overall profit growth was again driven by a strong
earnings improvement in the scaffolding business and a
turn-around in the yarn business. However, the highmargin drum closure business continued to support its
earnings with a steady performance. The profit before
interest and tax (PBIT) of the scaffolding business grew
by 90% YoY, backed by a revenue growth of 53% YoY and a
margin expansion of 282 basis points (BPS) YoY. The yarn
business reported a PBIT of Rs3 crore in Q3FY2015 against
a loss of Rs3 crore in Q3FY2014. The performance of the
garment and power businesses remained largely the same;
however, the management expects an improvement in
the garment business in future due to the upgradation of
its facilities in the recent past.
Overall, the stand-alone operating profit margin (OPM)
expanded by 1,000BPS YoY in Q3FY2015 to 17.8% which
helped the operating profit to jump by 167% YoY to Rs38.7
crore. Below the operating line, due to a lower other
income and depreciation cost, the reported profit after
tax (PAT) almost doubled to Rs21 crore. However, there
were large one-off items in Q3FY2014 related to foreign
exchange (forex) and NSEL investment write-off. If we
adjust that, the earnings show a growth of 58% YoY to
Rs22 crore.
Q3FY2015 performance
For Q3FY2015 TIIL reported a very strong earnings growth
of 58% year on year (YoY) to Rs22 crore (adjusting for the
extraordinary items related to foreign exchange
conversion and NSEL investment write-off). The revenues
for the quarter grew by 17% YoY to Rs217 crore mainly
driven by a strong growth in the scaffolding business.
Riding on high traction, the scaffolding revenues grew by
more than 50% YoY; nevertheless, the drum closure, yarn
and textile businesses extended support to the overall
revenue growth with a healthy double-digit growth.
Conference call highlights
The management expects to sustain the high growth
momentum in the scaffolding business while the growth
in the drum closure business could moderate to mid singledigit levels. The garment business is expected to see
traction in the days ahead due to the upgradation of its
facilities recently. Moreover, it is evaluating a few
inorganic growth opportunities in the drum closure and
information technology (IT) space which could give further
impetus to growth.
Segmental performance
Particulars
Q3
FY15
Q3
FY14
YoY
%
Q2
FY15
QoQ
%
Revenue
63
56
13
70
-10
EBIT
17
16
10
21
-17
27.1
27.7
(62)
29.3
(218)
100
65
53
74
35
15
8
90
9
67
14.7
11.8
282
11.8
282
53
47
13
39
38
(3)
-194
Drum closure
EBITM (%)
Scaffolding
Revenue
EBIT
EBITM (%)
Attractive valuation; strong balance sheet and cash flow
give comfort—retain Buy
Yarn
Revenue
EBIT
EBITM (%)
3
(3)
-195
5.2
-6.3
1,152
Given the improving outlook across business segments and
the potential upside from the utilisation of free cash on
book to achieve inorganic growth in related areas, we
continue to retain our positive stance on the stock in
spite of a close to 35% appreciation in its price since our
initiation report in August 2014. In the terms of valuations,
it is available at attractive multiples of 7x FY2016E and
6x FY2017E earnings. The strong balance sheet (net cash
and investment positive) and healthy cash flow generation
are also comforting factors. Therefore, we retain our Buy
recommendation on the stock with a price target of Rs270.
-7.7 1,297
Garment
Revenue
EBIT
EBITM (%)
8
6
31
7
8
(1)
(1)
-30
(1)
-34
-6.8
-12.7
588
-11.0
422
10
11
-9
3
199
1
1
80
(3)
-133
9.3
4.7
461
Power
Revenue
EBIT
EBITM (%)
-84.3 9,365
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a position in the companies mentioned in the article.
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investor’s eye
stock update
Speciality Restaurants
Reco: Hold
Stock Update
New restaurants affected OPM; maintain Hold with revised PT of Rs205
Key points
Company details
Price target:
Rs205
Market cap:
Rs859 cr
52 week high/low:
CMP: Rs183
Rs214/111
NSE volume:
(no. of shares)
72,990
BSE code:
534425
NSE code:
SPECIALITY
Sharekhan code:
SPECIALITY
Free float:
(no. of shares)
2.1 cr
Shareholding pattern
 Speciality Restaurants Ltd (SRL)’s revenues grew by 11% to Rs80.4 crore in
Q3FY2015. The growth was largely driven by new restaurant addition while
same-restaurant sales remained flat. SRL’s OPM was affected by an incremental
cost on account of new restaurants and an increase in the break-even period
for some of the restaurants launched in the previous quarters.
 The management has indicated that weekend sales have been encouraging in
the past few months. A lower corporate turnaround has affected the sales in
week days but the management expects the trend to improve in the coming
quarters. The impact of lower food prices would start flowing in from FY2016,
as the company would be tendering for new contracts for the supply of raw
materials. Accordingly, we have fine-tuned our estimates to factor in a lower
growth in the revenues and better margins.
 SRL would start witnessing an improvement in the operating performance from
FY2016 on the back of an expected pick-up in urban discretionary spending
(including at the corporate level). Thus, we maintain our Hold recommendation
on the stock with a revised price target of Rs205.
Results (stand-alone)
Price chart
Rs cr
Particulars
Q3FY15
Q3FY14
YoY %
Q2FY15
QoQ %
79.1
67.2
17.8
70.9
11.6
1.3
5.0
-73.5
4.1
-
Total revenues
80.4
72.2
11.4
75.0
7.2
Total expenditure
72.0
61.3
17.4
68.1
5.7
Operating profit
8.5
10.9
-22.3
6.9
22.3
Other income
2.0
2.8
-28.7
2.1
-7.1
Depreciation
6.5
4.7
37.3
6.1
6.6
Interest cost
0.0
0.0
-66.7
0.0
-66.7
PBT
4.0
8.9
-55.6
2.9
34.7
Tax
0.7
2.2
-66.8
0.6
21.3
Reported PAT
3.2
6.7
-51.9
2.3
38.2
EPS (Rs)
0.7
1.4
-51.9
0.5
38.2
GPM (%)
68.7
70.9
-222 BPS
68.6
13 BPS
OPM (%)
10.6
15.1
-457 BPS
9.3
130 BPS
Net sales
Other operating income
Price performance
(%)
1m
3m
-0.3
8.5
30.1
70.2
Relative -3.5
to Sensex
6.6
15.8
20.3
Absolute
6m 12m
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stock update
Conference call highlights
restaurants during the quarter. The management has
maintained its guidance of adding 14-15 new
restaurants per annum with investment of Rs45-50
crore in FY2016.
 The cover turnaround and cover charges for some of
SRL’s key restaurant brands remained flat during the
quarter. For Mainland China the cover-turnaround stood
at 1.38x while the average cover charge stood at Rs675680 per person. The cover-turnaround for Oh! Calcutta
stood at 1.28x (improved from 1.10x in Q2FY2015) while
for Sigree Global Grill the same was 1.70x (improved
from 1.47x in Q2FY2015) during the quarter. The average
cover charge for Sigree Global Grill and Oh! Calcutta
stood at Rs650-680 and Rs860 respectively.
 The response to the Mainland China-Asia Kitchen
format has been encouraging. The restaurant which
was first opened at Oberoi Mall in Mumbai in late 2014
has already broken even. The small portions and
regular portions are gaining a good response. Also, the
transformation of three Sigree restaurants and one
Machaan restaurant into Sigree Global Grill restaurants
has worked wonderfully well for the company. The
table turnaround and the cover charges have improved
in the transformed restaurants. The management has
indicated that it will look to further transform some
of the Sigree restaurants into Sigree Global Grill
restaurants in the coming years. The newly launched
Hoppipola and Mezzuna brands continued to perform
well for the company.
 The management has indicated that the cover
turnaround in weekends is almost double the cover
turnaround in week days (due to the impact of lower
corporate footfalls). The footfalls from corporates
remained low (especially in south India). The company
expects the same to improve in the coming years which
will help the average cover turnaround ratios of the
key brands to improve.
• In Q3FY2015, SRL acquired a 51% stake in Love Sugar
& Dough Bakery Company for Rs75 lakh. The brand
has three outlets in Mumbai. SRL is planning to improve
the fundamentals of the outlet in line with that of
Sweet Bengal (a confectionary store brand).
 The company added five restaurants—Mainland China
(1), Mainland China-Asia Kitchen (1), Hoppipola (2) and
Sigree Global Grill (1)—and closed down two
Valuations
Particulars
FY2013
FY2014
FY2015E
FY2016E
FY2017E
226.9
263.9
301.4
370.2
455.7
Operating profit (Rs cr)
36.8
34.0
30.1
48.6
74.9
Adjusted PAT (Rs cr)
23.4
18.9
10.8
23.5
42.3
5.0
4.0
2.3
5.0
9.0
OPM (%)
16.2
12.9
10.0
13.1
16.4
PE (X)
36.7
45.5
79.6
36.6
20.3
RoE (%)
11.5
6.4
3.5
7.4
12.4
RoCE (%)
14.6
8.5
4.8
10.0
16.7
Net sales (Rs cr)
Diluted EPS (Rs)
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a position in the companies mentioned in the article.
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