Sapphire Foods India Limited

Consumer Cyclical — Restaurants · NSE

₹197.00+₹0.66 (+0.34%)

DalalBaazaar Score

41 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Very High

Driven by moderate debt load, short-term liabilities exceed short-term assets, the company is currently loss-making.

In simple words: The company is currently losing money, though profits are falling even as sales grow. Short-term liquidity is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:59 pm

Understanding the Business

Company site ↗

The 60-second version of Sapphire Foods India Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Sapphire Foods India Limited owns and operates restaurants. The company engages in the franchisee business of KFC, Pizza Hut, and Taco Bell restaurants in India, Sri Lanka, and Maldives. Sapphire Foods India Limited was incorporated in 2009 and is based in Mumbai, India.

IndustryRestaurants

SectorConsumer Cyclical

Employees13,817

Annual revenue₹3,116 Cr

How does it make money?

Turns over ₹3,116 Cr a year. Of every ₹100 of sales, about ₹-1 reaches shareholders as profit, with ₹16 left at the operating level before interest, tax and depreciation. Each of its 13,817 employees supports ₹22.6 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹22.6 lakh

Who are its competitors?

The closest listed comparisons in its industry are MARUTI SUZUKI INDIA LTD., TITAN COMPANY LIMITED, TRENT LTD, AVENUE SUPERMARTS LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 3.1% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

Peer median ROE25.9%

What is the outlook?

9 analysts covering the stock expect revenue to grow about 12.1% and earnings to grow about 117.8% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+12.1%

Est. earnings growth+117.8%

Analysts9

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +38% while net margin moved -110% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+38%

Margin effect-110%

DalalBaazaar Score

41/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Return on equity is negative
✗ ROE has fallen by 20.9 points over the period

Quality vs. Valuation

Company Quality

41/ 100

Weak

How good the business is, ignoring the share price entirely.

Valuation

31/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

Weak on business quality and not cheap enough to compensate.

vs. its own history

Not enough price and earnings history

vs. sector peers

Not enough peers with a usable P/E

vs. generic bands

N/A

No P/E — the company is lossmaking

EV/EBITDA

15.5x

PEG

—

What's Good / What's Bad

🟢 What's Going Well1

Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 18.6% to -2.3% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 9.4% to 3.1% — often a sign of competition or overexpansion.

Red Flags

7 items require attention · 3 high · 4 watch

🔴Thin interest coverageFinancial
Operating profit covers interest only 0.7x — little room if earnings dip.
🔴The company is lossmakingFinancial
Net profit of -₹32 Cr in the latest reported year.
🔴Receivables growing faster than salesFinancial
Receivables up 95% against revenue up 38% — sales are being booked faster than they are collected.
🟡Debt is increasingFinancial
Total debt is up 47% over 3 years.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 1.2x to 0.7x.
🟡Margins are compressingFinancial
EBITDA margin is down 4.2 points over 3 years.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.63 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

No clear supporting case emerges from the available numbers.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 20.1% to 15.9%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Sales are being booked faster than collected
Receivables are up 95% against revenue up 38%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Returns on shareholder capital are falling
ROE has dropped from 18.6% to -2.3%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 9% a year✓ 11.3% CAGR
Latest reported year was 14.7%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 14%✓ 15.9%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA stays below 2x✗ 2.9x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4Interest cover stays above 3x✗ 0.7x
How much operating profit can fall before interest stops being comfortably covered.
5Free cash flow remains positive✓ ₹187 Cr
Profit that never becomes cash eventually stops being profit.

Investment Checklist

5 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✗ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✗ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

2 good · 4 neutral · 5 weak

Market Cap

₹6,339 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

Not meaningful

Loss-making

Earnings are negative, so a P/E multiple can't be read here

P/B Ratio

4.55x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹-0.5

Loss-making

Negative earnings per share — the business is losing money

ROE

-2.3%

Weak

Weak capital efficiency

ROCE

3.1%

Weak

Low return on total capital employed

Debt/Equity

1.02x

Moderate

Moderate leverage

Revenue Growth (YoY)

14.7%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-266.0%

Falling

Profits are shrinking

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

₹187 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

85.0x

Operating Margin

4.8%

Weak

Thin margins leave little room for error

Net Margin

-0.5%

Weak

Very little revenue reaches the bottom line

Current Ratio

0.63

Tight

Tight short-term liquidity

Beta (vs Nifty)

0.35

Defensive

Steadier than the market

52W Range Position

33%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

214.1 / 224.5

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

25.0

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹2,257 Cr	₹2,588 Cr	₹2,875 Cr	₹3,116 Cr	+11.3%
EBITDA	₹454 Cr	₹485 Cr	₹492 Cr	₹495 Cr	+2.9%
EBITDA Margin	20.1%	18.7%	17.1%	15.9%	—
PAT (Net Profit)	₹233 Cr	₹53 Cr	₹19 Cr	-₹32 Cr	—
EPS	₹7.26	₹1.64	₹0.6	₹-0.99	—
ROE	18.6%	3.9%	1.4%	-2.3%	—
ROCE	9.4%	7.1%	5.2%	3.1%	—
Total Debt	₹963 Cr	₹1,164 Cr	₹1,292 Cr	₹1,417 Cr	+13.8%
Free Cash Flow	-₹2 Cr	₹64 Cr	₹243 Cr	₹187 Cr	—

🟢 Revenue has grown at 11.3% a year over 3 years.

🟢 EBITDA has grown at 2.9% a year over 3 years.

🔴 EBITDA Margin has fallen from 20.1% to 15.9% over 3 years (-4.2 pts).

🔴 PAT (Net Profit) has turned negative, from ₹233 Cr to -₹32 Cr.

🔴 EPS has turned negative, from ₹7.26 to ₹-0.99.

🔴 ROE has fallen from 18.6% to -2.3% over 3 years (-20.9 pts).

🔴 ROCE has fallen from 9.4% to 3.1% over 3 years (-6.3 pts).

🔴 Total Debt has grown at 13.8% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹2 Cr to ₹187 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹3,256 Cr

Total Liabilities

₹1,867 Cr

Cash & Equivalents

₹68 Cr

Operating Cash Flow

₹507 Cr

Capex

-₹320 Cr

Shareholding (proxy)

Institutional Holding

67.6%

Insider Holding

26.1%

Analyst Consensus

Recommendations

16 Buy · 2 Hold · 2 Sell

Target Price (Mean)

₹252.95

+28.4% vs CMP

Target Range

₹180 – ₹311

Peer Comparison

Company	P/E	ROE
MARUTI SUZUKI INDIA LTD.	25.2x	13.4%
TITAN COMPANY LIMITED	68.5x	36.7%
TRENT LTD	87.2x	25.9%
AVENUE SUPERMARTS LIMITED	69.9x	12.7%

Recent News

4 mixed2 general

Sapphire Foods to host Q2FY27 earnings call on Oct 22 at 4 pm

scanx.trade, 18 OctResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Sapphire Foods India Share Price News After 5.09% Decline

Univest, 08 Oct

SAPPHIRE Forecast — Price Target — Prediction for 2027

TradingView, 25 JunAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Sapphire Foods Share Price Jumps 6% As KFC India Operator Swings To Profit: Should You Buy?

NDTV Profit, 27 JulPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Compare with

Equitymaster, 17 Oct

Devyani, Sapphire Foods shares rise 3% after revision of merger scheme

Business Standard, 27 AugM&A

🟡Mixed / dependsAcquisitions change the balance sheet before they change the earnings. Look at what was paid, how it was funded, and whether debt rose.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in oversold territory — could mean either a bargain or a stock still falling for good reason. Check the 'why' before assuming reversal.

DalalBaazaar Thesis

StrongGrowth

MiddlingRisk

WeakBusiness Quality · Financial Health · Profitability · Valuation

Points for each in the Score ↑

Weak on the fundamentals

Poor scores on business quality without a price low enough to compensate. There is no obvious argument for owning this over a stronger company at a similar valuation. 3 high-severity red flags sit above this conclusion and should be read first.

2 of 5 tripwires tripped — Debt / EBITDA stays below 2x; Interest cover stays above 3x · see Key things to watch ↑