SAPPHIRE - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 2.3

📊 Core Financials Breakdown

Profitability

ROE at 1.50% and ROCE at 5.11% are very weak, indicating poor capital efficiency.

EPS is negative at ₹-0.60, reflecting net losses in the latest quarter.

PAT dropped from ₹0.22 Cr to ₹-3.40 Cr QoQ, showing a sharp deterioration in earnings.

Debt & Liquidity

Debt-to-equity ratio of 0.98 is high, suggesting elevated financial risk.

No dividend yield, which limits shareholder returns.

Cash Flow & Stability

PEG ratio of -896 is distorted due to negative earnings.

Book Value of ₹39.2 vs Current Price ₹323 implies a high P/B ratio (~8.2), suggesting overvaluation.

📉 Valuation Metrics

Metric Value Insight

P/E Ratio 7,703 Extremely inflated due to negative earnings

P/B Ratio ~8.2 Premium valuation

PEG Ratio -896 Not meaningful due to losses

Intrinsic Value ~₹250–₹270 Estimated below current price

The stock appears significantly overvalued, especially given its weak financial performance.

🍔 Business Model & Competitive Edge

Sector: Sapphire Foods India Ltd is one of the largest franchisees of Yum! Brands in India, operating KFC, Pizza Hut, and Taco Bell outlets.

Strengths

Strong brand portfolio and pan-India presence

Institutional interest rising (FII +1.13%)

Challenges

Loss-making quarters

High debt and poor return ratios

No dividend and weak cash flows

Despite its brand strength, the company is struggling to convert scale into profitability.

📌 Entry Zone Recommendation

Suggested Entry Range: ₹250–₹270

Near recent support levels and below current price

RSI at 48.5 suggests neutral momentum

MACD mildly positive, but volume is declining

🧭 Long-Term Holding Guidance

Avoid Fresh Entry at Current Levels: Fundamentals do not support the valuation.

Hold Only if Speculative: Suitable for high-risk investors betting on turnaround.

Watchlist Triggers

Return to profitability

Debt reduction

Margin expansion

Sapphire Foods has brand power, but its financials are far from appetizing. A turnaround story needs more than just name recognition—it needs earnings.

Let me know if you'd like a peer comparison with Devyani International or a sector outlook on QSR chains.

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