Suppose you decided to give in to your long time dream of setting up a restaurant, would you spend 10 crore rupees to do it and expect to make your money back in 39 years profiting at the rate of only 25 lakh, 64 thousand every year.
A rate of return on 2.5% on your investment.
Well, if you invest in the current IPO of Speciality Restaurants, you`d be doing just that. At a mind bogglingly unrealistic valuation of 800 crores, Speciality Restaurants is the con of the year on a scale only inferior to the 2g scam. With just 69 restaurants, it works out the the fantastic figure of about 10 crore per restaurant.
Setting up a decent restaurant with quality kitchen equipment costs about 2 crores if you don’t know how to do it and 1.75 crores if you do. So where does the additional 8 crores go? Well that’s pure gravy. Or maybe even baloney.
Most of its restaurants if not all are rented and not owned. So there isn’t much real estate value. It got 75 crores in funding from SAIF Partners and in my opinion that is what it actually costed the company to set up all the restaurants that it did since the funding. I was even more horrified to see that they had debt ! A restaurant company with no receivables lag or real estate ownership having debt !
It would have been hilarious if it wasn’t about money.
If this issue sails through, my belief in the eternal stupidity of the Indian Investor and in the eternal Bulshitability of the Indian Investment Banker will forever be enshrined.
Deval Tibrewalla
@Asha & Rajiv : Thank you !
@ Deepak : That it did. I think it was .55 in the retail portion. Yup, the Jubilant Foodworks hangover is there for all to see. For the shareholders and the fund who exited, it was blockbuster. Those, who bought, were er umm…!
Vasudevan Uppili
sparkling…The 10 points are the 10 Gems….each one of it is high up there…the young testaments