Speciality Restaurants

Speciality Restaurants is the owner of restaurant brands like Mainland China, Flame & Grill, Machaan, Oh! Calcutta, Sigree and Haka.The company came out with its IPO in 2012 at 150/-Rs, but couldnt perform as expected. As a result, the share price mostly traded below the IPO price. Company has many positives like a professional management under the leadership of Anjan Chatterjee with vast experience in this field, proven execution skills ,rapid expansion ,asset light business model with good cash flow,excellent brand loyalty ,low debt etc. It has more than 100 stores in the names mentioned above .The company plans to open 15 to 16 restaurants in the next fiscal. They are also planning to target middle east by getting into Dubai

The company takes 120 days to setup a restaurant and another 6 months for its breakeven. For logistics the company has made tieup with Just Dial.The company's perfomance in the past few quarters have been flat.As we know, this business perfoms best when economy is in the boom. Due to subdued economic activity, the amount of money spent by people in luxuries like outside dining has come down.To maintain the footfalls into the restaurants, the company didnt go for any price increse.This caused a fall in operations profit margins. Also the same stores growth remained flat

Looking into the financials one may not find the company attractive. But once the economic activity picks up, more and more people will dine outside and it will be huge positive for branded restaurants like Specialty. At the cmp of 118, its worth putting some money if one beleive in the future of branded restaurant business

Disc: No Investments in Speciality Restaurants

Repco Home

Repco Home Finance Ltd  is a leading low to medium ticket size home loan financing company predominately based in tier 2/3 cities of southern India. Promoted by the State-owned Repco Bank Ltd in 2000, Repco has grown from strength to strength with its loan book clocking nearly 42 percent CAGR in the last 5 years.The compunded profit growth for past 5 years is about 40% and ROE is 22%. The company has maintained a robust NIM of 4.6 percent along with a healthy spread of  3.2 percent.

Repco has 102 branches and satellite centres, with ~90% located in Southern India.They are expanding footprint by selectively setting-up new branches in the states of Maharashtra, Gujarat, Odisha and West Bengal. Loans to salaried and non-salaried borrowers constitute 46% and 54% of loan book.The company has an Experienced board and management team with many of them being IAS officers.As of 31st december 2013, the company on an employee strength of 411 has a net worth of about 7000 million.The company has a net NPA of under 1.3%(2.3% same time last year).With strong focus on recoveries, there has been a continuous improvement in the asset quality over quarters.The interesting thing about Repco is that it has no exposure to developer loans.It sources 65% of its funds from banks and rest from NHB and parent bank

The company also considers IIR (Installment to Income Ratio) while lending and average IIR ratio since the last 5 years stands at 50 percent of the gross monthly income of borrowers. The company has, since

inception, written-off merely Rs3.9 crore as bad-debts out of its strong cumulative Rs3500 crore loan book

They has been able to successfully operate branches in tier 2 and tier 3 cities at low costs ensuring the commercial viability of such branches. The average breakeven period for branches in Tamil Nadu is less than 1 year whereas for others it varies between 18-24 months.

 The promoters hold nearly 38% in the company.Another 20% is in the hands of FII's and DII's. Funds like Citigroup,Reliance Capital and SBI are holding shares in the company. Going forward the demand for affordable housing and housing loans will increase in India. This gives Repco ample scope for aggressive growth. At the cmp of 308 rs, the stock is trading at a p/e of 18. But considering the consistent good results given by the company, one can look into the stock and add it into portfolio

Alembic Pharma

After a long gap, today i am writing about a company called Alembic Pharmaceuticals. Established in 1907, Alembic Pharmaceuticals Ltd. (APL) is based vertically integrated pharmaceutical company. APL is enjoying market leadership in the Macrolides segment of anti-infective drugs in India. APL, the market leader in anti-infective segment and has brands such as Azithral , Althrocin and Roxid .The anti-infectives segment is a moderate-growth segment and is the largest therapeutic category in the domestic market. Returns in this segment are lower due to pricing pressures arising due to high competition. Hence, to diversify its risk and to improve its returns, it entered the chronic segments by the acquisition of Dabur Pharma’s non-oncology business in 2007.

APL's business is spread across branded formulations, international generics and APIs. The Company has a reach over 75 countries and has a presence in both regulated and semi-regulated markets.40% of its revenue comes from export .In API business, the company intends to exit low margin products and graduate to new profitable products with sizeable potential. Alembic Pharma plans to focus on existing branded formulations business through effective pan- India distribution network and therapy based marketing and by pushing ahead acute and chronic segments like anti infectives and cough & cold medications. The company increased its annual production of tablets and capsules from 2.6 billion to 5 billion in 2013-14. Over the next five years, products generating $142 billion are expected to go off patents which present huge opportunity for launching new generic products. Alembic Pharmaceuticals expects a CAGR of 30% in international generics. Over last 2-3 years there has been a contrasting change in the company. The revenues are growing at 20-25%,the operating margin improved from 13% in 2011 to the current 18% and the operating profit is expected to double to 330 cr in fy14 from 160 cr in 2011.

Reason for the change is the shift towards the international generics. This segment is expanding quite quickly for the company – from about 100 odd Cr in 2010 to 235 Cr in 2013. This segment has a potential to scale up to 1000 Cr turnover over the next 2-3 years. APL’s Research and Development is focused on fermentation technology, strain improvement, industrial enzymes, non-infringing process developments for APIs & intermediates, development of innovative formulations. Alembic Pharma has filed 60 ANDAs.

Speciality therapy performance

Segment               Industry growth (%)               Alembic’s growth (%)

                           Opthamology          11                                         39

                           Cardiology              13                                         37

                           Diabetology             23                                        41

                          Gastroentology          12                                        27

                          Gynaecology              7                                         21

                          Nephrology               16                                        45

                           Orthopedic               8                                          9

Net profit of Alembic Pharmaceuticals rose 38.45% to Rs 67.84 crore in the quarter ended December 2013 as against Rs 49.00 crore during the previous quarter ended December 2012. Sales rose 29.02% to Rs 475.82 crore in the quarter ended December 2013 as against Rs 368.80 crore during the previous quarter ended December 2012. The market rewarded the stellar results, the company has been delivering by taking the price from 74 to 230 in the last year. I beleive that at the cmp of 227/- its worth putting some money considering the potential of the industry and the good future numbers that are expected from Alembic