Sapphire Foods IPO: The IPO of Sapphire Foods India, which runs KFC and Pizza Hut, has so far received 56 percent subscription on the second day of the bidding process. The issue has so far received bids for 54.56 lakh equity shares against an offer size of 96.63 lakh shares. The portion reserved for retail investors saw 2.97 times subscription, while the portion reserved for non-institutional investors was subscribed only 6 per cent. Qualified Institutional Buyers (QIBs) bid for 82,728 shares against 52.70 lakh shares reserved for them, i.e. 2 per cent subscribed.
Sapphire Foods is an omni-channel restaurant operator as well as the largest franchise company of Yum Brands in the Indian sub-continent. It runs restaurants of brands like KFC, Pizza Hut and Taco Bell in the country. As of March 31, 2021, it has 204 KFC restaurants in India and Maldives as per the available data. It has 231 Pizza Huts in India, Sri Lanka and Maldives. It has two Taco Bell restaurants in Sri Lanka. It is the largest international QSR (Quiss Service Restaurant) chain in Sri Lanka. The number of Sapphire Foods restaurants in the Indian subcontinent increased from 376 in 2019 to 437 in 2021.
Experts opinion
- ICICI Direct Research Research Analysts Sanjay Manyal and Hitesh Tonk have given the IPO an ‘Unrated’ rating. Sapphire Foods has leading QSR brands in its portfolio of running restaurants.
- It monitors the experience of their customers with the restaurant through a Sophisticated Guest Experience Survey (GES) system. GES system is a third party tool used worldwide to measure customer satisfaction. The research firm said that the negative publicity of junk food, non-exclusive franchise agreement and possibility of termination, and high competition in the QSR segment are the risks and concerns of this IPO.
- Marwari Financial Services analysts have given ‘subscribe’ rating to the issue as the company is a leading QSR brand with substantial market presence and a new restaurant economic model for expansion. Moreover, it is available at a reasonable valuation as compared to its peers companies.
- The research firm said that considering TTM (June 2021) adjusting EBITDA of Rs 1,823.74 on a post-issue basis, the company is going to list at an EV/EBITDA of 41.38 with a market cap of Rs 74,980 million. While its pierce company Jubilant Foodworks and Westlife Development are trading at EV/EBITDA of 49.26 and 73.55 respectively.
(Article: Surbhi Jain)
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