1. At a Glance
Sapphire Foods is the fast-food franchise giant behind your cheat day sins—KFC, Pizza Hut, and Taco Bell. But in Q1 FY26, profits ghosted harder than your gym trainer after New Year’s. Revenue up 8%, but net loss of ₹1.74 crore. Clearly, the only thing sizzling was the chicken.
2. Introduction with Hook
Imagine ordering a bucket of KFC, only to open it and find… just tissues and ketchup. That’s Q1 FY26 for Sapphire.
- Revenue: ₹776.8 Cr (YoY growth: 8.3%)
- Net Profit: -₹1.74 Cr (versus ₹8.19 Cr last Q)
It’s like watching your favorite cricketer get out on a full toss. You expect fireworks, but get heartbreak and debt-servicing.
3. Business Model (WTF Do They Even Do?)
Basically, they run restaurants they didn’t invent, using menus they don’t own, under brands they don’t control… and still pay royalties for the privilege.
Their gig?
- 463 KFCs (India + Maldives)
- 437 Pizza Huts
- 9 Taco Bells in Sri Lanka
Think of Sapphire as the glorified landlord who flips burgers and burns cash in 3 time zones.
4. Financials Overview
Let’s peel this chicken:
| Metric | Q1 FY25 | Q1 FY26 | YoY Growth |
|---|---|---|---|
| Revenue | ₹718.3 Cr | ₹776.8 Cr | +8.1% |
| EBITDA | ₹144.3 Cr | ₹112.9 Cr | -21.7% |
| Net Profit | ₹8.19 Cr | -₹1.74 Cr | Negative Zindagi |
| OPM | 17.3% | 14.5% | Slipping like pizza cheese |
Margins are now tighter than jeans after buffet night. The decline in EBITDA? Blame input costs, brand mix shifts, and probably some angry Colonel Sanders.
5. Valuation
“If you think paying 633x P/E is wise, you probably buy water bottles from 5-star hotels.”
Method 1: P/E-based Valuation
- EPS (TTM): ₹0.27
- Let’s be generous: assign 100x P/E (QSRs can be spicy)
- FV = ₹27
Method 2: EV/EBITDA
- EV/EBITDA (industry average): 25x
- EBITDA FY25: ₹477 Cr
- EV = ₹11,925 Cr → FV ≈ ₹325–₹375 range
Fair Value Range: ₹27 – ₹375
Yes, that’s a massive range. But then again, so is the quality of Pizza Hut outlets.
6. What’s Cooking – News, Triggers, Drama
- Q1 FY26: Opened 11 new outlets. That’s nice.
- GST demand of ₹112.7 Cr under dispute. That’s spicy.
- 30% promoter holding now → earlier 51%. Exit ka season?
- Sri Lanka remains a cash cow. Until rupee depreciation eats it.
In short: Mixed grill. One side paneer, the other burnt toast.
7. Balance Sheet
| Item | FY25 (₹ Cr) |
|---|---|
| Equity Capital | 64 |
| Reserves | 1,334 |
| Borrowings | 1,292 |
| Total Liabilities | 3,040 |
| Net Fixed Assets | 2,338 |
“Debt: Not Titanic-level, but the ship is wobbling.”
And with rising depreciation and lease liabilities, Sapphire’s financial pizza has too much crust and not enough cheese.
8. Cash Flow – Sab Number Game Hai
| Year | CFO | CFI | CFF | Net CF |
|---|---|---|---|---|
| FY23 | ₹382 Cr | -₹204 Cr | -₹195 Cr | -₹17 Cr |
| FY24 | ₹449 Cr | -₹187 Cr | -₹213 Cr | ₹49 Cr |
| FY25 | ₹508 Cr | -₹337 Cr | -₹211 Cr | -₹39 Cr |
Cash flow looks like your freelancer friend — always busy, rarely paid. Positive from operations, but investing and financing keeps draining the wallet.
9. Ratios – Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| ROE | 2% |
| ROCE | 6% |
| D/E | 0.97 |
| OPM | 16% |
| P/E | 633x (TTM) |
“ROCE flatter than a day-old dosa.”
And P/E so inflated it could float over Dalal Street during monsoon.
10. P&L Breakdown – Show Me the Money
| Year | Revenue | EBITDA | PAT |
|---|---|---|---|
| FY23 | ₹2,266 Cr | ₹430 Cr | ₹233 Cr |
| FY24 | ₹2,594 Cr | ₹462 Cr | ₹52 Cr |
| FY25 | ₹2,882 Cr | ₹477 Cr | ₹17 Cr |
PAT is falling faster than your resolve during a diet. From ₹233 Cr in FY23 to ₹17 Cr in FY25. Yikes.
11. Peer Comparison
| Company | Rev (Cr) | PAT (Cr) | P/E | ROCE |
|---|---|---|---|---|
| Jubilant Food | ₹8,142 | ₹228 | 191x | 12.9% |
| Devyani Intl. | ₹4,951 | -₹10 | — | 6.4% |
| Westlife | ₹2,533 | ₹10 | 1,197x | 6.7% |
| Sapphire | ₹2,940 | ₹7 | 633x | 5.8% |
Sapphire is that friend who copies everyone’s homework and still scores below average.
12. Miscellaneous – Shareholding, Promoters
| Quarter | Promoter | FII | DII | Public |
|---|---|---|---|---|
| Sep ’22 | 51.27% | 12.6% | 16.77% | 19.36% |
| Jun ’25 | 26.06% | 31.55% | 37.86% | 4.52% |
Promoter stake halved faster than fries at midnight. FIIs & DIIs now run the show. Public is almost extinct — the QSR of retail investors?
13. EduInvesting Verdict™
Sapphire Foods is trying hard — expanding outlets, sweating the margins, but carrying a financial body that screams Post-Zinger Syndrome.
Great brands. Bleeding bottomline.
A decent pit stop. But don’t expect business class legroom.
Metadata:
Written by EduInvesting Team | 23 July 2025
Tags: Sapphire Foods, QSR, KFC, Pizza Hut, Franchise Business, EduInvesting Premium
