Buy Sapphire Foods; target of Rs 350: Motilal Oswal

Motilal Oswal's research report on Sapphire Foods

Sapphire Foods India (SAPPHIRE) reported revenue growth of 7% YoY (in line) in 2QFY26, backed by a 10% YoY increase in store count. KFC sales grew 7% YoY and same-store sales declined 3% (in line). Excluding Navratri, sales grew 10% YoY with flat SSSG. Pizza Hut (PH) revenue declined 6% YoY as same-store sales declined 8% (est. -7%). PH in Tamil Nadu grew in double digits, backed by mass media advertising. PH saw 5% store additions. Sri Lanka posted healthy revenue growth of 23% YoY (+18% in LKR), driven by 14% LKR SSSG and 7% store growth.

Outlook

The stock trades at 42x and 28x pre-Ind-AS EV/EBITDA on FY26E and FY27E, respectively. We reiterate our BUY rating on the stock with a TP of INR350 (30x Sep’27E pre-IND-AS EV/EBITDA).