Speciality Restaurants -Value Pick ::Anand Rathi

Speciality Restaurants

Closing 175                                   Reco: Buy                        Expected Value  228                Nifty Level 5922

Investment Rationale - Asset light model with wide spread presence pan India Most of the properties are leased.  - Launch of MIZUNA – All day dining bar and restaurant “Adding a feather to the hat”, introducing new model in the kitty.  - Focus on Mainland China, develop other brands as well Maintain a tight basket of brands with a focus on Mainland China brand.  - Robust expansion plans Plan envisages the setting up of 45 new restaurants by FY 2015.  - Focusing on the other trends of the business ‘Takeaway market’ ,’ Ready to eat’  & ‘One meal package’.  - Industry potential Fine dining is a part of organized segment of Indian food services and this segment is expected to be worth  80bn by 2015, expecting a CAGR growth of 30% from 2010-2015. Valuation With expansion plans set and in progress, cash on hand and no debt requirement for the same makes the financial position for the company very strong.  Good brand name and diversified kitty though authentic Chinese food (Mainland China) being the USP gives an edge over.  We see a strong 5 years CAGR growth in top line of 20% and bottom line 38% for the company in the period of FY09-FY14. We value the company on 15xEV/EBITDA for FY14, which gives a target of 228 for next one year.

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