SAPPHIRE - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 2.9

📊 Sapphire Foods India Ltd (SAPPHIRE) — Long-Term Investment Analysis

Sapphire Foods is a major franchisee of Yum! Brands, operating KFC, Pizza Hut, and Taco Bell outlets across India, Sri Lanka, and the Maldives. While the brand strength is undeniable, the financial metrics and valuations are currently unfavorable for long-term investment.

🔍 Key Financial Metrics

Metric Value Interpretation

P/E Ratio ~539–1190 Extremely overvalued vs. industry PE

PEG Ratio 10.35 Overpriced relative to growth

ROE / ROCE 1.85% / 5.76% Weak capital efficiency

Dividend Yield 0.00% No income generation

Debt-to-Equity 0.92 Acceptable, but rising

EPS ₹0.28 Minimal earnings

Profit Margin 0.30% Very low net profitability

Qtr Profit Var -121% Volatile earnings

📈 Technical & Trend Indicators

Current Price: ₹326

DMA50 / DMA200: ₹328 / ₹320 — neutral trend

RSI: 44.9 — slightly bearish

MACD: 2.21 — weak bullish crossover

Volume: Below average — low conviction

📌 Ideal Entry Price Zone

Accumulation Zone: ₹275–₹295

Near 52-week low

Only suitable for high-risk contrarian investors

Entry should be based on turnaround visibility, not valuation

🧭 If You Already Hold SAPPHIRE

🕒 Holding Strategy

Time Horizon: Short to medium term (6–12 months)

Watch for

ROE improvement above 8%

EPS growth and margin expansion

Debt reduction and positive free cash flow

🚪 Exit Strategy

Profit Booking: Near ₹375–₹400 (52W high)

Stop-Loss: ₹265 (below 52W support)

Re-evaluate: If PEG remains above 5 and ROE stays below 5%

⚠️ Final Verdict

Sapphire Foods is not a compelling long-term investment at current valuations. The sky-high P/E and PEG ratios, coupled with low profitability and earnings volatility, suggest that the stock is priced for perfection without delivering it. While brand strength and market presence are positives, the financials don’t support a buy-and-hold thesis.

Would you like a comparison with Devyani International or Jubilant FoodWorks to explore better QSR plays?

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