Sapphire Foods India (SAPPHIRE) Q1 24/25 earnings summary

Executive summary

• Q1 FY25 consolidated restaurant sales grew 10% year-over-year to INR 7,182.89 million, with EBITDA up 1% to INR 1,242 million, despite subdued discretionary spending and festival-related headwinds impacting KFC sales.

• KFC experienced steady performance, Pizza Hut reversed its declining ADS trend, and Sri Lanka operations delivered strong SSSG and transaction growth.

• Sapphire Foods added 13 KFC and 1 Pizza Hut restaurants in India, reaching a total of 886 outlets as of June 30, 2024.

• Unaudited consolidated and standalone financial results for the quarter ended June 30, 2024, were reviewed and approved by the Board on July 30, 2024.

• Results prepared in accordance with Indian Accounting Standards (Ind AS) and SEBI regulations.

Financial highlights

• Consolidated revenue from operations for Q1 FY25 was INR 7,182.89 million, up from INR 6,543.84 million in Q1 FY24.

• Consolidated EBITDA was INR 1,242 million (17.3% margin, up 1% YoY); adjusted EBITDA INR 707 million (9.9% margin, down 8.8% YoY).

• PAT was INR 82 million (1.1% margin, down 67% YoY); adjusted PAT INR 172 million (2.4% margin, down 45% YoY).

• Basic EPS (consolidated) for Q1 FY25 was INR 1.34, down from INR 3.92 in Q1 FY24.

• Gross margin stable at 68.8% (up 10 bps YoY).

Outlook and guidance

• KFC store count on track to double in three years, targeting close to 500 by December 2024.

• Pizza Hut store expansion to remain cautious, with muted additions until profitability and ADS targets are met.

• Management expects marketing investments for Pizza Hut to remain at current elevated levels for several quarters.

• If negative SSSG persists and margins fall below target, KFC store expansion pace will be revisited.

• Management notes continued subdued consumer spending and plans to support Pizza Hut with ongoing product innovation.