Reduce Sapphire Foods; target of Rs 1000: HDFC Securities

HDFC Securities recommended reduce rating on Sapphire Foods with a target price of Rs 1000 in its research report dated May 12, 2023.

Broker Research

May 14, 2023 / 22:43 IST

reduce

26 Aug, 2025 12:21

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HDFC Securities' research report on Sapphire Foods

Sapphire’s Q4FY23 performance was operationally weak, largely led by moderating SSSG. While the India revenue grew by 23%, led by store addition, SSSG was weak for both KFC (+2%) and PH (-4%) on account of a tough demand environment. The impact on operating margins was more profound (more so for the weaker franchise like PH) as weak SSSG led to negative oplev. KFC/ PH ROM fell 110bps/ 530bps QoQ to 19/8.6%. Notwithstanding near-term weakness, the management has maintained its medium-term guidance of 5-7% SSSG growth and doubling store count (over 3-4 years). In the near term, we expect pressure on margins for QSR companies to sustain due to decelerating discretionary spending.

Outlook

We maintain our EPS estimates and value Sapphire at 50x P/E on Jun’25 EPS to arrive at a TP of INR 1,000. Maintain REDUCE.

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