Speciality Restaurants Limited — Q3 FY26 earnings call

Call held 11 Feb 2026

Management summary

Speciality Restaurants Limited reported a strong Q3 FY26, achieving its highest-ever revenues and profitability, driven by a 9% stand-alone revenue growth and significant margin expansion. Operational EBITDA margin improved to 12.75%, and gross margins reached 70.8%. However, profitability was partially offset by a provision for gratuity as per new government regulations.

Highlights

  • Company recorded its highest revenues and profitability in Q3 FY26.

  • Stand-alone revenue grew by 9% year-on-year.

  • Operational EBITDA margin expanded to 12.75% from 11.85% in the previous year.

  • EBITDA post-IndAS stood at 24.89% compared to 23.43% in the prior year.

  • Gross margins improved significantly to 70.8% from 69.3% year-on-year.

Concerns

  • Profitability was impacted by a gratuity adjustment or provision as per new government law.

Key financials

  1. Stand-alone Revenue Growth — +9%YoY
  2. Operational EBITDA Margin 12.8%
  3. Previous Operational EBITDA Margin 11.8%
  4. EBITDA Margin (post-IndAS) 24.9%
  5. Previous EBITDA Margin (post-IndAS) 23.4%
  6. Gross Margins 70.8%
  7. Previous Gross Margins 69.3%

What they filed

Q1 FY27: revenue up 16.8%, net profit up 38.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue104 126 103 109 116 +12%135 +7%116 +13%127 +17%
EBITDA15 26 15 18 19 +26%28 +9%18 +15%24 +36%
Net profit3 9 2 5 4 +57%8 −11%3 +34%7 +39%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

medium confidence
  • Capex Capex disclosed cash generated by the business
    • New restaurant openings
    Absolutely. We looks like it was the cash generated by the business would be utilized for the capital expenditure.

Guidance & targets

Capacity

  • New restaurant openings Capacity · next year · High confidence 8 to 10 restaurants
    Mr. Prakash, we expect to open around 8 to 10 restaurants, which have been the history when we were doing peak businesses earlier. So this year also, we plan that we would be able to open 8 to 10 new restaurants with Walters in the range of around 3 to 5 restaurants in the next year as a QSR category, which is on the growth path for us.

    — Rajesh Kumar Mohta

  • New Walters QSR openings Capacity · next year · High confidence 3 to 5 restaurants

    — Rajesh Kumar Mohta

Market Expansion

  • International expansion Market Expansion · soon · Medium confidence aggressively
    And now you'll be happy to know that very soon we are looking at Saudi and expanding in UAE aggressively.

    — Anjan Chatterjee

What to watch in Q4 FY26

New restaurant openings

next year
Current 8-10 restaurants planned for next year
Target Progress on opening 8-10 new restaurants

Why it matters

Tracking the execution of new store expansion is key to organic growth.

Mr. Prakash, we expect to open around 8 to 10 restaurants, which have been the history when we were doing peak businesses earlier. So this year also, we plan that we would be able to open 8 to 10 new restaurants with Walters in the range of around 3 to 5 restaurants in the next year as a QSR category, which is on the growth path for us.

Risks & concerns

  • Gratuity adjustment/provision impacting profitability

    medium

    Profitability was affected by a mandatory gratuity adjustment as per new government law.

    Management acknowledged

  • Uncertainty regarding the service charge issue and government regulations

    medium

    Analyst raised concerns about recent media reports and government stance on service charges, but management did not provide a response.

    Analyst not addressed

  • Potential impact of IT job losses on revenue in tech-heavy cities (Pune, Bangalore)

    low

    Management believes the impact is minimal due to diverse customer base and brand positioning in corporate and residential areas.

    Analyst downplayed

Q&A highlights

5 direct, 1 evasive
Service charge issue and government stance Evasive
And lastly, last 2, 3 days, there have been a lot of this thing on the media on the service charge issue, which has come back and government is saying it's not compulsory, companies can't charge it. So any thoughts on that? Those are my questions.

Analyst raised a critical regulatory concern that management did not address, indicating potential uncertainty or sensitivity around the topic.

Asked by Prakash Kapadia

Impact of IT job losses on Pune and Bangalore revenue Direct
So there's a huge traffic which comes in from the residents. And also, there is some kind of IT coming in and out. But we've not seen any kind of an impact as yet because as you know, the history of Mainland China and all the associate brands like Asia Kitchen, etc., which is in Wakad, Phoenix or we are in Amanora, there is a different kind of an audience, which comes to the Asia Kitchen, Mainland China kind of a genre. So I don't think it is so IT dependent.

Management provided a detailed rationale for why IT job losses have not significantly impacted their revenue in these cities, citing diverse customer base and brand positioning.

Asked by Prakash Kapadia

Restaurant addition plans for FY27 and associated capex Direct
Mr. Prakash, we expect to open around 8 to 10 restaurants, which have been the history when we were doing peak businesses earlier. So this year also, we plan that we would be able to open 8 to 10 new restaurants with Walters in the range of around 3 to 5 restaurants in the next year as a QSR category, which is on the growth path for us.

Management provided specific numerical guidance for new restaurant openings, including QSR, and confirmed that capex would be funded by internal cash generation.

Asked by Prakash Kapadia

Shift and pickup in the delivery business Direct
Pandemic actually brought us to deliveries. We were only takeaways and partial deliveries here and there. Those as you know, that this phenomenon is actually the OTT watching, binge watching and the deliveries have grown as a habit. As a habit, the social fabric has changed that people have started ordering in because of traffic, because of the habit which happened during pandemic, and it has grown. For us, it used to be around 5%, 6%. It's grown to 24%.

Management quantified the significant growth in delivery revenue from 5-6% to 24% and explained the strategic efforts (CRM, AOV management) to manage this channel while also driving dine-in traffic.

Asked by Ashutosh

Performance and future plans for international operations (Dubai, London) Direct
As you know that in Dubai, we have a master franchise understanding with a company called Resolute. And it's based on a minimum revenue that minimum profitability that they've given to us around 6% of the total turnover or a percentage in terms of the value which comes in and there's a minimum threshold they pay us. So there have been Mall of Emirates. Then now there are city centers going to be opening in March. Then we have another called even Battuta. Muscat is already operating, and then we have an Abu Dhabi. So since we have that arrangement, there's no capex, which is required, and it's just that our management, our menu reengineering and chefs flying in as and when required, obviously, at their cost. So it's a master franchise understanding. And now you'll be happy to know that very soon we are looking at Saudi and expanding in UAE aggressively.

Management clarified the asset-light master franchise model for international expansion, highlighting no capex requirement and plans for aggressive expansion in Saudi and UAE, providing insight into future growth drivers.

Asked by Ashutosh

Traction and strategy in non-metro cities like Chandigarh Direct
But then I would not consider Chandigarh as a mini-metro because the kind of audiences because we were there in Chandigarh pre-pandemic. We had to shut it and we were doing exceptionally well there, in Sector 26. But we found that the Mainland China should not be started. So we started Asia Kitchen by Mainland China in a mall called Elante, and which is basically owned by Blackstone. And though it's a space which is only 2,000 square feet because we're optimizing the space these days, smaller the place, less the staff, lesser the capex. So frankly speaking, you'll be very happy to know that it's been very, very encouraging right in the beginning as per the store metrics. And it's building up, but it's too early to get in.

Management detailed their successful re-entry into Chandigarh with a smaller format (Asia Kitchen by Mainland China) and optimized capex, indicating a viable strategy for non-metro expansion.

Asked by Ashutosh

2 min read 6 chapters

Detailed narrative

Q3 FY26 Financial Performance Highlights

Speciality Restaurants Limited achieved its highest-ever revenues and profitability in Q3 FY26. The company reported a 9% year-on-year growth in stand-alone revenue. Operational EBITDA margin saw a significant improvement, rising to 12.75% from 11.85% in the previous year, while EBITDA post-IndAS stood at 24.89% compared to 23.43%. Gross margins also expanded to 70.8% from 69.3% year-on-year, primarily due to efficiency management and increased revenues from the Oriental brand.

Expansion Strategy and Capex

The company plans to open 8 to 10 new restaurants in the next year, continuing its historical expansion rate. This includes 3 to 5 new Walters QSR category restaurants, which is identified as a growth area. Management confirmed that the capital expenditure for these new openings would be funded entirely through cash generated by the business, emphasizing a focus on smaller formats to reduce capex and operational costs.

Digital and Delivery Channel Growth

The delivery business has seen substantial growth, increasing from 5-6% to 24% of total revenue, a trend accelerated by the pandemic. Despite not being delivery-oriented, the company maintains a strong average order value (AOV) and good relationships with aggregators like Swiggy and Zomato. Efforts are underway to enhance customer engagement through CRM initiatives, direct offers, and redemption coupons to encourage dine-in visits, particularly on slower days like Monday and Tuesday.

International Operations and Master Franchise Model

Speciality Restaurants operates its international business, particularly in Dubai, through an asset-light master franchise model with Resolute. This arrangement ensures a minimum revenue and profitability share (around 6% of turnover) without requiring direct capex from the company. Existing locations include Mall of Emirates, upcoming city centers in March, and operations in Muscat and Abu Dhabi. The company is actively looking to expand aggressively in Saudi and further in UAE.

Chandigarh Market Traction and Strategy

The company successfully re-entered the Chandigarh market with 'Asia Kitchen by Mainland China' in Elante mall, a Blackstone-owned property. Despite being a smaller format of 2,000 square feet, the new outlet has shown encouraging store metrics from the outset. This strategy of optimizing space, reducing staff, and lowering capex for new openings, especially in markets where the Mainland China brand is already recognized, is proving effective.

Impact of External Factors and Regulatory Environment

While the company achieved high profitability, it noted a caveat related to a gratuity adjustment or provision mandated by new government laws, which impacted the bottom line. Regarding concerns about IT job losses affecting revenue in cities like Pune and Bangalore, management stated they have not seen a significant impact due to a diverse customer base and strategic locations. An analyst's question about the service charge issue was not addressed by management.

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