Speciality Restaurants has been allotted an Initial Public Offering (IPO) grade of ‘4/5' to the proposed IPO by CRISIL. The grade reflects Speciality’s strong foothold in the fine-dining restaurant segment in India with 73 restaurants and confectioneries under 11 brands spread across 17 cities in India and one in Dhaka, Bangladesh.
The company has been successful in creating brands like Mainland China (also the flagship brand) and Oh! Calcutta. The grade also factors in the company’s strong focus on quality food, attentive services and ability to identify locations with high consumer traffic. Further, its strategy to introduce new brand concepts has enabled it to attract more guests per day for all its restaurants, thereby improving the overall profitability.
The grade also takes into account the company’s prudent expansion strategy through internal accruals, which has enabled it to manage the overall risk in this business. Further, the grade is influenced by the strong and professional management team, the strong internal control system implemented by the company and good corporate governance practices being followed therein.
However, the grade is moderated by the fact that the food service industry is highly fragmented and there is stiff competition from the organized (domestic and international), as well as unorganized players. Besides, Speciality’s business is dominated by the success of a singular brand, Mainland China, which contributes more than 50 per cent to overall revenue.
This grade indicates that the fundamentals of the IPO are above average relative to the other listed equity securities in India. However, this grade is not an opinion on whether the issue price is appropriate in relation to the issue fundamentals. The grade is not a recommendation to buy, sell or hold the graded instrument, its future market price or suitability for a particular investor.
The company has been successful in creating brands like Mainland China (also the flagship brand) and Oh! Calcutta. The grade also factors in the company’s strong focus on quality food, attentive services and ability to identify locations with high consumer traffic. Further, its strategy to introduce new brand concepts has enabled it to attract more guests per day for all its restaurants, thereby improving the overall profitability.
The grade also takes into account the company’s prudent expansion strategy through internal accruals, which has enabled it to manage the overall risk in this business. Further, the grade is influenced by the strong and professional management team, the strong internal control system implemented by the company and good corporate governance practices being followed therein.
However, the grade is moderated by the fact that the food service industry is highly fragmented and there is stiff competition from the organized (domestic and international), as well as unorganized players. Besides, Speciality’s business is dominated by the success of a singular brand, Mainland China, which contributes more than 50 per cent to overall revenue.
This grade indicates that the fundamentals of the IPO are above average relative to the other listed equity securities in India. However, this grade is not an opinion on whether the issue price is appropriate in relation to the issue fundamentals. The grade is not a recommendation to buy, sell or hold the graded instrument, its future market price or suitability for a particular investor.