Sapphire Foods Q1 Results Review - Leveraging Tactical Interventions To Navigate Uncertainty: Dolat Capital

Dolat Capital Report

Sapphire Foods India Ltd.’s Q1 FY25 revenue and Ebitda were in line with our estimates. The company reported 9.8% revenue growth supported by 11.3/2.6% growth in KFC/Pizza Hut.

The company opened 14 new stores in Q1 (13 KFC, 1 Pizza Hut and 0 in Sri Lanka and Maldives), taking the total store count to 886. KFC’s store count is expected to double over three-four years from base of December 2021. However, Pizza Hut store addition will remain muted.

We believe that Pizza Hut business will continue to face steep competition not just from the leader but also from other emerging players. We have maintained our FY25/26E Ebitda estimates, as Q1 performance was broadly in line with the estimates. Valuing the stock at 16 times enterprise value/Ebitda, arrive at a target price of Rs 1,542 (earlier Rs 1,353). Maintain ‘Sell’ rating.

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