Emkay Global Financial's research report on Sapphire Foods
Sapphire’s Q1 EBITDA was largely in line with estimates. Revenue grew 20%, led by 27% growth in store count, flat SSG in KFC/PH Sri Lanka (SL) and 9% SSG decline in PH India. For KFC, focus remains on retaining the strong topline growth with stable margins, while PH’s focus is on marketing and improving product/value proposition to capitalize on recovery in category growth. New product innovation continued with launch of KFC snackers (7 products) at Rs99 and earlier launch of entry-level pizzas/big menu-revamp in PH. Gross margin improved by 60bps QoQ, suggesting bottoming of the RM pain.
Outlook
Sapphire expects PH network expansion to moderate with weak trends, while KFC expansion will continue. Unhurried store addition coupled with slower SL recovery drive the 3% cut to our estimates. TP remains unchanged at Rs1,400/sh on 3M rollover.
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