Speciality Restaurants hits new high ahead of EGM; zooms 41% in one month

On December 21, the board approved an issue of 6 million warrants, each convertible into 1 equity share of the company at a price of Rs 212.05 to allottees other than promoters

Shares of Speciality Restaurants rallied 11 per cent to hit a new high of Rs 278.50 on the BSE in Tuesday’s intra-day trade.

In the past two days, the stock of the restaurant company has surged 16 per cent ahead of its extra-ordinary general meeting (EGM) on Wednesday, January 18, 2023, which will be held to take shareholder approval for fund raising through the preferential issue to non-promoters.

In the past one month, the stock has zoomed 41 per cent as compared to a 1.4 per cent decline in the S&P BSE Sensex. Further, in the past six months, it has nearly doubled--up 98 per cent--as against 12.5 per cent rise in the benchmark index.

On December 21, 2022, the board of directors of Speciality Restaurants approved an issue of 6 million warrants, each convertible into, or exchangeable for, one equity share of the company at a price of Rs 212.05 each aggregating up to Rs 127.23 crore to allottees other than promoters on a preferential basis.

For obtaining the approval of the shareholders of the company for the aforementioned matters, the board of directors will meet in the EGM on January 18, 2023.

Speciality Restaurants has proposed to allot one million warrants each to Nexpact, Ekta Halwasiya and AG Dynamic Funds, and 0.5 million warrants each to JE Impex DMCC and Varun Agarwal.

Speciality Restaurants is engaged in the business of operating restaurants and confectionaries across India, Qatar, UAE and United Kingdom for more than 25 years.

As on September 30, 2022, the company had 83 restaurants and 38 confectionary stores across 14 cities in India, 2 ‘Asia Kitchen by Mainland China’ restaurants in UAE and 1 ‘Riyasat’ restaurant at Doha, Qatar. The company also operates 1 restaurant under the brand name ‘Chourangi’ in London under a joint venture.

Meanwhile, for the first half (April to September) of financial year 2022-23 (H1FY23), Speciality Restaurants had reported a 549 per cent year-on-year (YoY) jump in profit after tax at Rs 25.71 crore and 102 per cent YoY rise in revenue at Rs 195.52 crore.

The food and beverages industry in India has a strong potential and there are significant growth opportunities in the domestic markets. The company has positioned to capitalize on these growth opportunities and its brands are well-equipped to cater to the taste buds of consumers, the management said.

The company continues its focus on controlling the costs and improving value proposition for guests. Delivery through kitchen, within kitchens and cloud kitchens continue to be a significant proportion to total revenues. The company strives to maintain profitability by improving overall margins, mitigating inflationary pressure on input cost and to continue to be a debt free company, the management said.

Technical View
Bias: Bullish
Target: Rs 326
Support: Rs 265; Rs 232

Shares of Speciality Restaurants have been trading with a bullish bias since the Golden Crossover on the daily chart in late December. The stock has rallied 33 per cent in this period.

With today's rally, the stock is seen trading above the higher-end of the Bollinger Bands on the daily chart. The short-term bias is likely to remain bullish as long as the stock sustains above Rs 265. 

The overall trend is likely to remain positive as long as the stock trades above its 20-DMA, placed at Rs 232-odd level. 

On the upside, the stock can potentially rally to Rs 289.50 - Rs 308 - Rs 326.40, indicates the yearly Fibonacci chart.

(With inputs from Rex Cano)