SPECIALITY - Speciality Rest.

📊 NSE: SPECIALITY 🏢 Hotels 📅 Last Updated: 12/14/2025 13:37

💰 Financial Performance

Revenue Growth by Segment

Overall revenue grew 5% in fiscal 2024 to INR 387 Cr. The Sweet Bengal brand grew 10.2% YoY in Q2 FY26, reaching INR 10.05 Cr compared to INR 9.12 Cr in the previous year. Same-store sales growth (SSSG) turned positive at +1.39% in Q2 FY26 from -1.31% in the prior quarter.

Geographic Revenue Split

The company operates over 125 stores across 10 major Indian cities including Mumbai, Delhi, and Bangalore, with 3 international outlets. A new wholly-owned subsidiary was incorporated in Dubai, UAE, in November 2025 to oversee strategic investments in the Middle East.

Profitability Margins

Gross margins improved to 70.4% in Q2 FY26 from 69.3% YoY and 70.2% sequentially due to favorable inflation. Operating margins have been volatile, ranging from 2.3% to 22.1% over the last five fiscal years, reaching 22.1% in FY23 and 26.5% in 9M FY23.

EBITDA Margin

Operational EBITDA margins improved to 7.1% in Q2 FY26 compared to 6.2% YoY (excluding treasury income). This improvement is driven by increased contributions from renovated restaurants and better cost rationalization.

Capital Expenditure

The company is funding its expansion through internal accruals and a warrant issue of INR 127.23 Cr (of which INR 41.35 Cr was raised initially). Capex is focused on opening 8-10 new restaurants annually and developing a 0.960-acre land parcel in Bhubaneswar.

Credit Rating & Borrowing

CRISIL upgraded the long-term rating to 'CRISIL A-/Stable' from 'BBB+/Positive' and the short-term rating to 'CRISIL A2+'. The company has remained debt-free for the past five fiscal years through 2024.

⚙️ Operational Drivers

Raw Materials

Food and beverage ingredients (specific commodity names not disclosed) represent the primary cost of goods sold, reflected in the 29.6% raw material cost (inverse of 70.4% gross margin).

Capacity Expansion

Current capacity is approximately 125 outlets. The company plans to expand by 8-10 restaurants every 12 months, focusing on high-street and premium neighborhood locations like Bandra, Mumbai.

Raw Material Costs

Raw material costs are approximately 29.6% of revenue as of Q2 FY26. Favorable inflation led to a 110 basis point YoY improvement in gross margins.

Manufacturing Efficiency

Efficiency is driven by 'each restaurant generating profit' and cost-cutting steps including reduction in employee costs and closure of non-performing units.

Logistics & Distribution

Delivery services account for 25% of total revenue. The company spends approximately 5% of its revenue on aggregator platforms to maintain visibility and steady-state delivery volumes.

📈 Strategic Growth

Expected Growth Rate

10-15%

Growth Strategy

Growth will be achieved through a hub-and-spoke model in Mumbai, opening 8-10 new restaurants annually, and expanding the 'Gong' brand into premium neighborhood locations. The company is also leveraging its new Dubai subsidiary for international strategic investments and has entered a strategic collaboration for land development in Bhubaneswar.

Products & Services

Fine-dining restaurant services, Quick Service Restaurant (QSR) formats, and confectionery products.

Brand Portfolio

Mainland China, Asia Kitchen by Mainland China, Oh! Calcutta, Sweet Bengal, Riyasat, Barishh, Episode One, Hoppipola, Dariole, and Gong.

New Products/Services

Launch of the 'Gong' brand in Bandra (January 2026) and expansion of the 'Sweet Bengal' confectionery line.

Market Expansion

Targeting Mumbai for dense expansion via commissaries and international expansion through the Dubai-based Speciality Restaurants L.L.C-FZ.

Market Share & Ranking

One of the largest fine-dining restaurant chains in India; specific market share % not disclosed.

Strategic Alliances

Strategic Collaboration and Investment Agreement with Esensos Services and Solutions LLP for land development in Bhubaneswar, Orissa.

🌍 External Factors

Industry Trends

The industry is seeing a shift toward delivery (25% of SRL revenue) and GST rationalization is creating positive consumer sentiment. The sector is highly fragmented with significant competition from unorganized players.

Competitive Landscape

Intense competition from both organized chains and fragmented unorganized local restaurants.

Competitive Moat

Moat is built on established brand equity (Mainland China, Oh! Calcutta) and a 25-year track record. Sustainability is supported by a debt-free balance sheet and a large cash surplus of INR 157.42 Cr.

Macro Economic Sensitivity

High sensitivity to economic cycles; fine-dining revenue is highly correlated with discretionary spending levels.

Consumer Behavior

Increasing preference for delivery and premium neighborhood dining over traditional mall-based fine dining.

Geopolitical Risks

International operations in Dubai and 3 other international outlets expose the company to regional regulatory and economic shifts.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to food safety standards and local municipal licensing for restaurant operations.

Taxation Policy Impact

GST rationalization in the restaurant sector is cited as a driver for recent 'euphoria' and growth.

⚠️ Risk Analysis

Key Uncertainties

Volatility in operating margins (historically 2% to 22%) and high fixed cost structures could impact profitability by 10-15% during economic slowdowns.