SAPPHIRE - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 1.9

📊 Financials: Sapphire has a market cap of ₹7,426 Cr. Current price is ₹231 with a 52-week high/low of ₹375/₹221. PAT this quarter is -17.3 Cr vs -3.40 Cr in the previous quarter, showing worsening losses. ROCE at 5.11% and ROE at 1.50% reflect weak efficiency. Debt-to-equity ratio of 1.04 indicates high leverage risk.

💹 Valuation: Stock P/E is not meaningful due to negative earnings. Book value is ₹38.7, giving a P/B ratio of ~5.96, which is expensive relative to fundamentals. EPS is -0.65, highlighting losses. PEG ratio unavailable due to negative earnings. Industry PE is 123, but Sapphire’s losses make comparison irrelevant.

🏭 Business Model: Sapphire operates in quick-service restaurants (QSR), primarily as a franchisee for global brands. Competitive advantage lies in brand association and scale, but profitability is under pressure due to high operating costs and debt burden. Business model is consumption-driven but currently lacks margin strength.

📈 Entry Zone: Technically, DMA 50 (₹261) and DMA 200 (₹296) are above current price, showing bearish trend. Entry is favorable only near ₹220–₹230 if signs of turnaround emerge. Current RSI at 26.6 indicates oversold conditions, but fundamentals remain weak.

🕰️ Long-Term Holding: Loss-making status, high debt, and weak return ratios limit attractiveness for long-term compounding. Investors should avoid fresh entry until profitability stabilizes and debt is reduced.

Positive

• ✅ Strong brand association in QSR sector
• ✅ Oversold RSI (26.6) offers technical bounce potential

Limitation

• ⚠️ Negative PAT (-17.3 Cr)
• ⚠️ High debt-to-equity ratio (1.04)
• ⚠️ Weak ROCE (5.11%) and ROE (1.50%)
• ⚠️ P/B ratio ~5.96 despite losses

Company Negative News

• 📉 FII holding reduced (-0.24%)
• 📉 DII holding reduced (-0.61%)
• 📉 Quarterly losses worsening (PAT -3.40 Cr → -17.3 Cr)

Company Positive News

• 📈 Strong franchise partnerships with global QSR brands
• 📈 Potential for turnaround if costs are managed

Industry

• 🏭 QSR industry PE at 123 reflects high growth expectations
• 🏭 Sector driven by consumption and urbanization trends

Conclusion

🔎 Sapphire is fundamentally weak with losses, high debt, and poor return ratios. Despite strong brand presence, valuations remain unjustified. Entry zone lies near ₹220–₹230 only for speculative traders. Long-term investors should avoid until profitability stabilizes.

Would you like me to extend this with a peer benchmarking overlay comparing Sapphire against other QSR franchise operators, or a sector scan to highlight stronger consumption-driven companies?