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Sapphire Foods, which operates KFC, Pizza Hut and Taco Bell restaurants in India, dropped nearly 1.5 percent on August 25 morning, a day after the promoter offloaded a 2.55 percent stake in the company.
At 11.51 am, the stock was trading at Rs 1,353.60 on the National Stock Exchange, 0.87 percent lower from the previous day.
Promoter Sapphire Foods Mauritius sold 16.25 lakh equity shares in the franchisee of Yum! Brands Inc via open market transaction at an average price of Rs 1,355. Wtcnam Common Trust Funds Trust Emerging Markets Opportunities Portfolio bought 11.14 lakh shares, or 1.75 percent stake, at the same price.
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Sapphire Foods is one of the largest franchisees of Yum! Brands on the subcontinent and operates more than 700 KFC, Pizza Hut and Taco Bell restaurants across India, Sri Lanka and the Maldives.
Promoters, which include private equity players such as Sagista Realty Advisors Private Limited (Trustee of QSR Management Trust), Ironman Investments Limited, and Samara Capital Partners Fund II Limited, hold around 44.86 percent stake in the company.
The company reported a 20 percent year-on-year (YoY) consolidated restaurant sales growth in the June quarter despite consumer demand headwinds. Its revenue stood at Rs 652 crore. Its consolidated operating profits or EBITDA rose 10 percent YoY to Rs 122.4 crore.
Consolidated profit after tax declined to Rs 248 crore from Rs 381 crore in the year-ago quarter.
The company opened 35 restaurants — 17 KFC and 16 Pizza Hut outlets and one outlet each in Maldives as well — in the first quarter of FY24, taking the restaurant count to 778.
Brokerage calls
In a report early this month, brokerage firm Motilal Oswal had a “buy” call for Sapphire Foods with a target price of Rs 1,585, a potential upside of nearly 18 percent from the current market price.
“The management has reiterated its previous guidance to double the store count in the next three to four years, implying a 15-25 percent store CAGR,” it said.
Brokerage firm Emkay Global Financial Services has a “hold” rating with a 12-month target price of Rs 1,400 a share, a potential upside of 5 percent from the current price.
Sapphire’s Q1 EBITDA was largely in line with estimates. Revenue grew 20 percent, led by 27 percent growth in store count, it said a August 3 report.
Sapphire Foods stock has gained 14.02 percent over the last six months, outperforming the Nifty50 which has risen 11.77 percent during the period.
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