SAPPHIRE - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 2.6

📉 Sapphire Foods shows significant operational challenges and weak financial metrics, with high debt and negative earnings, making it a risky long-term investment at current levels.

📈 Positive

• Strong Brand Portfolio: Operates KFC, Pizza Hut, and Taco Bell franchises in India and Sri Lanka.
• High Trading Volume: Volume more than double the weekly average, indicating active investor interest.
• Consumer Cyclical Sector: Positioned to benefit from rising discretionary spending in urban India.

⚠️ Limitation

• Negative Profitability: PAT of -₹17.3 Cr. and EPS of -₹0.65 ₹ reflect ongoing losses.
• Weak Return Metrics: ROCE at 5.11% and ROE at 1.50% indicate poor capital efficiency.
• High Debt: Debt-to-equity ratio of 1.04 raises concerns about financial stability.
• Declining Institutional Confidence: FII and DII holdings both decreased.
• MACD Negative: -4.27 suggests bearish momentum.

📉 Company Negative News

• Quarterly profit plunged 1,717%, indicating severe operational strain

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• Annual EPS has been declining for the past two years

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• Trading below both 50 DMA and 200 DMA, signaling technical weakness.

📈 Company Positive News

• Three-year return of 45.9% driven by 12.7% quarterly revenue growth and 2.0% profit margin

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• Strong franchise model with scalable operations across multiple geographies

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🏭 Industry

• Hospitality and restaurant sector is recovering post-pandemic, but remains volatile.
• Industry P/E of 485 reflects extreme valuation levels, possibly skewed by outliers.
• Competition from peers like Westlife, Barbeque Nation, and Restaurant Brands Asia is intense

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🧾 Conclusion

• Entry Zone: ₹240–₹260 may offer speculative entry for high-risk investors.
• Long-Term View: Avoid until profitability stabilizes and debt is reduced.
• Turnaround Watch: Monitor quarterly results and margin improvements before considering accumulation.

Sources

stockpricearchive.com

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