Sapphire Foods India (SAPPHIRE) Q2 24/25 earnings summary

Executive summary

• Q2 FY25 consolidated restaurant sales grew 8% year-on-year to INR 6,940 million, but EBITDA declined 1% to INR 1,152 million at a 16.6% margin due to challenging demand conditions.

• Net loss after tax for Q2 FY25 was INR 62.38 million, mainly due to an exceptional non-cash impairment of INR 114.2 million for the Maldives business, which saw a 57-60% sales drop year-on-year due to geopolitical issues.

• 23 new stores were added in Q2 FY25, bringing the total restaurant count to 909 as of September 30, 2024.

Financial highlights

• Adjusted EBITDA fell 13% year-on-year to INR 590 million (8.5% margin), and adjusted PBT before exceptional items was INR 53 million (0.8% margin).

• Gross margin improved slightly to 69.0% (up 10 bps year-on-year), but operating margin was pressured by higher costs and impairment.

• Cash and bank balances increased to INR 2,277 million from INR 1,676 million as of March 2024.

Outlook and guidance

• Management expects H2 to improve as vegetarian festival days subside, with cautious optimism for better performance and a focus on brand revival, product innovation, and operational excellence.

• Store expansion will be more cautious, with Pizza Hut additions slowing to 20-25 for the year and Sri Lanka expansion remaining in single digits.