Specialist Restaurants IPO - Whats so special on the menu?

We, Generation-next urbanites are always eager to hang out and looking out for various occasions to dine out – be it pubs, theme and upscale restaurants to satisfy our tasting buds. In midst of that we now have a company running fine dine restaurants –Mainland China, Machan, Oh! Calcutta…So just like in US which had TACO Bells, Dunkin Donuts, McDonalds etc. we too now have the companies operating restaurants.

The restaurant business is pretty simple to understand and is usually cash flow positive. This was the primary reason of evaluating whether to invest in Specialty Restaurants owning these above brands of Mainland China, Machan, and Oh! Calcutta. The company currently runs 69 restaurants and 13 confectionary stores across 22 cities in India. Mainland China, its biggest brand, accounts for 60.3% of its revenues, followed by Oh! Calcutta at 12.3%.

The company is planning to raise Rs.182 crores
•FY 11 Sales – Rs. 173 crores
•Operating Profit –Rs.38 crores (OPM of 22%)
•NPM - 9%
•Debt / equity -0.28x
•ROE – 17%
•Zero dividend

Looking at above why won’t I invest:
PE is ~40x – Given the company is only growing 40% CAGR since 5 years, it doesn’t give any significant bargain. Also, the ROE is just 17%. There are other companies available on exchanges which has +20% ROE, consistent dividend payers but still available at the cheaper rates. Also, the company said it wants to focus more Company Owned Company operated stores (COCO) instead of franshise operations. This won’t be helpful for the company as it has to divert money in expensive real estate in metros and Tier 1 cities. So 40% growth in the long-run looks somewhat far-fetched.
Yes, one may miss out on listing gains (don’t know if there will be any) but one has to know the difference between investment and speculation. So parting with the quote of Ben Graham - "An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative."

As usual, Guinea Pigs, pl do your own research

Instant gratification!!!

Yesterday I was chatting with my sister...that itself is a daunting task...but still I tried to maintain my flow...she actually was waiting for someone...that friend had already left her home before 15 mins and was on her way to my residence. This topic inadvertently came across when she called her to ask where are you?

Flashback 15 years, imagine she calls....well, can she call? There were no mobiles then, but we had one virtue which we hadn’t lost-Patience, and moreover, we didn’t seek any instant gratification. We waited for things to happen in their own sweet time...And this is just a synecdoche, which can encompass many small things..for which we had patience to wait

• Buying your first car
• Buying your AC
• Going for movies after 4-5 weeks
• Many more examples

However, is patience good for the economy? Something to think about...
Credit growth will decline, people postponing their gratification will lead to fall in desire to purchase things and deny any sense of pleasure

So we do need fast life, where we earn and then spend whatever we earn...Savings decline will help boost in economy. Ok so what? There is no right answer as it depends on person to person

Just wrote this post after reading Kabir's Doha

Dhire dhire re mana, dhire sab kuch hoye
mali sinche sau gadha, hritu aaye fal hoye

Think about it...

Stubble

Stubble is the order of the say. New actors now sport the stubble which makes the leading ladies fall for this guy. Take Aayushyaman from Vicky Donor or Arjun Kapoor from ishaqzaade. They both have beards to woo their prospective mates. Times are changing – who wants to go around with clean shaven guys. This observation is coming from pubs and workplace too. Even Abhishek Bacchan used stubble for impressing Aishwaria :P. Have to adapt to the new age – Next Change – Rathin’s stubble look….