Sapphire Foods India Limited IPO

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i. Sapphire Foods India is YUM brand’s largest franchise operator in the Indian subcontinent. The company owns 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 are also Sri Lanka’s largest international QSR chain, in terms of revenue. Its total number of restaurants in the Territories grew from 376 restaurants as of 2019 to 450 restaurants as of 2021.

ii. The Company has an in-house supply chain function, and it work with its vendor partners for food ingredients, packaging, warehousing, and logistics with the goal of providing its restaurants with the optimum level of inventory at the highest level of quality in a standardized and cost-efficient manner.

iii. The Company operates warehouses across five cities in India to service its restaurants in India, and have invested in building technology solutions including a restaurant-level SAP enterprise resource planning (“ERP”) system and POS software solutions in its restaurants.

Competitive Strengths

• 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 the experienced management team and backed by institutional capital

Objects of the Sapphire Foods India Limited IPO:

The objects of the Offer are to: (i) Carry out the Offer for Sale of up to 17,569,941 Equity Shares by the Selling Shareholders, (ii) Achieve the benefits of listing the Equity Shares on the Stock Exchanges (iii) Enhancement of the Company’s brand name amongst the existing and potential customers and creation of a public market for the Equity Shares in India.

Sapphire Foods India Limited IPO Details:

Open Date: Nov 09 2021
Close Date: Nov 11 2021
Total Shares: 17,569,941
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Built Issue
Issue Size: 2073 Cr.
Lot Size: 12 Shares
Issue Price: ₹ 1120-1180 Per Equity Share
Listing At: NSE,BSE
Listing Date: Nov 22 2021

Promoters And Management:

i. Sanjay Purohit, is the Whole Time Director and Group CEO of the Company. He had pursed mechanical engineering from Mangalore University and is an alumnus of The Indian Institute of Management Bangalore. Before joining the Company, he was the Managing Director for Levi Strauss & Co India, and was also associated with Cadbury India Limited, Mobil Peevees Company Limited, Asian Paints (India) Limited, Aristocrat Marketing Limited, International Medical Company, and Goodlass Nerolac Paints Limited. He has over 30 years of work experience across consumer product categories including food and apparel retail, packaged food, and paints. ii. Sunil Rewachand Chandiramani, is the Chairman and Independent Director of the Company. He holds a bachelor’s degree in commerce from University of Mumbai, and an honours diploma in systems management from the National Institute of Information Technology. He is also an associate of the Institute of Chartered Accountants of India. Prior to joining the Company, he was associated with S.R. Batliboi & Co. LLP as a partner from April, 1996 to March, 2001 and with Ernst & Young LLP as a partner from April, 2001 to September, 2014. He is also the founder of NYKA Advisory Services and currently manages its business affairs as the proprietor. He has experience of over 29 years and has worked in the field of accounting and advisory services. iii. Sumeet Subhash Narang, is a Non-Executive Director of the Company as a nominee of Sapphire Foods Mauritius Limited (Selling Shareholder). He holds a bachelor’s degree of engineering in the field of mechanical engineering from University of Roorkee and has completed his master’s in business administration from Harvard University and has also pursued a post graduate diploma in management from Indian Institute of Management Society, Lucknow. Further, he has been awarded the John L. Loeb Award, from the MBA Financial AID and Fellowship Board, Harvard Business School.

Financials of Sapphire Foods India Limited IPO:

Particulars (in Millions) Mar 21 Mar 20
Revenue from operations 10,196 13,404
Cost of materials consumed 3,099.26 4,316.71
Employee benefits expense 1,956.00 2,288.11
Other expenses 3,896.93 4,943.40
Operating Profit 1,244 1,856
OPM% 12% 14%
Other income 616.16 113.24
Finance costs 755.65 721
Depreciation 2,091.45 1,913.00
Profit Before tax -986.94 -1,609.83
Tax Expense 12 -17
Profit After Tax -999 -1,592.47
EPS -19 -31.36

Comparison With Peers:

The company competes within the food services market and the QSR segment not only for customers, but also for personnel and suitable sites for their restaurants. The competitors include international QSR chains operating in India, such as McDonalds, Domino’s Pizza, Subway and Burger King, as well as local restaurants in the QSR segment.
Name of the company Total Income (₹ in million) Face Value (₹) EPS RoNW NAV per equity share (₹
Jubilant FoodWorks Limited 33,849 10 17.55 16.16 108
Westlife Development Limited 10,303 2 -6.38 -20.66 30
Burger King India Limited 5,229 10 -5.47 -25.82 17.59
Devyani International Limited 11,988. 1 -0.5 -48.52 1.03

Recommendation on Sapphire Foods India Limited IPO:

Review and Recommendation of Sapphire Foods IPO by InvestorZone is 5/10 1. As of June 31, 2021, they owned and operated 209 KFC restaurants in India and the Maldives, 239 Pizza Hut restaurants in India, Sri Lanka and the Maldives, and 2 Taco Bell restaurants in Sri Lanka. In 2020, KFC, Pizza Hut and Taco Bell recorded system sales worldwide of US$26.2 billion, US$11.9 billion and US$11.7 billion, respectively. 2. Despite showing revenue of ~1000 Crores in FY21, the company is still in loss. 3. Devyani International which has same franchise of KFC, Pizza Hut etc as that of Sapphire, it available at ~18000 Cr Mcap on 1100 Crores revenue. So, Mcap/Sales = 16x. While, Sapphire with almost same revenue is coming up at ~7500 Cr of Mcap. 4. Good chances of listing gain as something has left on table for the investors as compared to its listed peers.

Registrar of Sapphire Foods India Limited IPO:

  1. Link Intime India Private Limited

Company Address:

Sapphire Foods India Limited 702, Prism Tower, A Wing, Mindspace, Link Road, Goregaon (West), Mumbai, 400 062, Maharashtra, India. Phone: +91 22 6752 2343 Email: Website

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