IPO Alert - Sapphire Foods India IPO

Sapphire Foods India Limited IPO

Sapphire Foods India limited one of YUM’s franchisee operators in the Indian subcontinent. They are also Sri Lanka’s largest international QSR chain, in terms of revenue. Company also established a presence in the Maldives. Company-owned and operated 209 KFC restaurants in India and the Maldives, 239 Pizza Hut restaurants in India, Sri Lanka and the Maldives, and two Taco Bell restaurants in Sri Lanka. They operate their restaurants in high traffic and high visibility locations in key metropolitan areas and cities across India and develop new restaurants in new cities as part of their brand and food category expansion. The company has an in-house supply chain function and works with vendor partners for food ingredients, packaging, warehousing, and logistics. The company operates warehouses across 5 Indian cities and has invested in building technology solutions in their restaurants. The company employs YUM brand’s global online and digital channel solutions to enhance customer experience and achieve operational efficiency and financial control.

    • Food services is a key segment in the Indian economy, with a market size of US$26.8 billion in the financial year 2021 growth of the food services sector in India is expected to grow more.
    • Company’s franchisee Arrangement also provides a right to use YUM’s system and system property covering all aspects of business
      operations, as well as the flexibility to undertake, with YUM’s approval, local or regional promotions, while meeting YUM’s global
      quality assurance standards.
    • The organized market, consisting of chain and organized standalone outlets, is expected to increase its share in the food services market in India from 37.8% in financial year 2020 to 51.3% in financial year 2025.

Outlook & Valuation:

The Company recorded a loss of Rs (99.89) cr. in the financial year FY21 against a loss of Rs (159.25) cr. in the previous year FY20. Revenue from operations in the same period declined to Rs 1,019.62 cr. in FY21 from Rs 1,340.41 cr. in FY20 due to the Covid-19 crisis. The issue is priced at a P/BV of 14.63 based on its NAV of Rs. 80.67 as of June 30. Sapphire Foods is a Leading quick-service restaurant brand with a large market presence and size. Their initial public offer will be a pure offer for the sale of its equity shares; also the company is loss-making in the last three financial years. The company aims to break even in the near future. We are in a bull run of IPO’s where new edge businesses are on the front seat. IPO euphoria might lead to listing gain as the IPO is arriving at a P/S of 7x which is half to its peers however we expect the peers to outperform Sapphire Food over the long run. Thus we assign a “SUBSCRIBE” rating with a cautious

IPO Rating


    • Sanjay Purohitis the Whole Time Director and Group CEO of the Company. He has over 30 years of work experience across consumer product categories including food and apparel retail, packaged food, and paints.
    • Sunil Rewachand Chandiramani is the Chairman and Independent Director of the Company. He has experience of over 29 years and has worked in the field of accounting and advisory services.
    • Sumeet Subhash Narang is a Non-Executive Director of the Company as a nominee of Sapphire Foods Mauritius Limited.
    • Manish Mehta is a Non-Executive Director of the Company as a nominee of Sapphire Foods Mauritius Limited. He has experience of over 17 years.
    • Vikram Ranjan Agarwal is a Non-Executive Director of the Company as a nominee of QSR Management Trust for the past 13 years and has worked in the field of private equity.
    • Kabir Kishin Thakur is a Non-Executive Director of the Company. He has experience of over 14 years
    • Deepa Gopalan Wadhwa is an Independent Director of the Company.
    • Anu Ram Aggarwal is an Independent Director of the Company.


    • Leading QSR brands with a substantial market presence and scale
    • Strong relationship with YUM
    • Continuous focus on delivering great customer experience
    • Operational excellence
    • Scalable new restaurant economic model for expansion
    • Great place to work led by experienced management team and backed by institutional capital


    • Company reported loss for the last three financial years and may incur additional losses in the future.
    • The Coronavirus disease (COVID19) pandemic has substantially affected and may continue to affect the business
    • Company will not receive any proceeds from the Offer for Sale. The Selling Shareholders will receive the net proceeds from the Offer for Sale.
    • Company incurred indebtedness and may incur additional indebtedness in the future which could affect their ability to obtain future financing or pursue any growth strategy.
    • There are material outstanding legal proceedings involving the Company, Subsidiaries, and Directors…

IPO Note - Sapphire Foods India Limited

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