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 (16.6% margin) due to muted demand and higher costs.

• Net loss after tax for Q2 FY25 was INR 62.38 million, compared to a profit of INR 152.14 million in Q2 FY24, mainly due to an exceptional non-cash impairment of INR 114 million for the Maldives business, which saw a 57-60% sales drop year-on-year due to geopolitical issues.

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

Financial highlights

• Q2 FY25 consolidated restaurant sales rose 8% YoY to INR 6,940 million; 6M FY25 sales up 9% YoY to INR 14,105 million.

• Adjusted EBITDA for Q2 FY25 declined 13% YoY to INR 590 million (8.5% margin); reported EBITDA down 1% YoY to INR 1,152 million (16.6% margin).

• Adjusted PBT before exceptional items was INR 143 million (2.1% margin), down 52% YoY.

• PAT for Q2 FY25 was -INR 62 million, down from INR 152 million in Q2 FY24.

• Gross margin remained stable at 69.0% in Q2 FY25.

Outlook and guidance

• Management expects H2 to improve as vegetarian festival days subside, with cautious optimism for better performance.

• Focus remains on SSSG revival through value, product innovation, and operational excellence.

• Pizza Hut brand revival strategy includes increased marketing investments and new product launches.

• KFC expansion to continue, but with more caution after doubling store count; Pizza Hut store additions to slow to 20-25 for the year.

• Sri Lanka store expansion to remain in single digits until further macro improvement.