Sapphire Foods - Business Model Intact; Equally Focused On Both Formats: Motilal Oswal

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Motilal Oswal Report.We factor in a revenue/pre-Ind accounting standard Ebitda compound annual growth rate of 23%/30% over FY23-25E. Sapphire Food India Ltd. trades at an inexpensive multiple of 19 times FY25E pre-Ind AS Ebitda. We have assigned an FY25E enterprise value/Ebitda (pre-Ind AS 116) multiple of 25 times to the KFC business, based on its robust metrics (average daily sales and restaurant Ebitda margin), and 15 times to the Pizza Hut business. These multiples are at 50% discount to the target multiples of Devyani International Ltd..'s KFC/Pizza Hut businesses (50 times/30 times) due to the following difficulties that Sapphire faces in terms of trade:Sapphire’s territorial rights in KFC are primarily in states with a relatively higher vegetarian population, and Devyani International can venture into Sapphire's territories with PHD format stores, which require lower capex. While a discount to its multiples is justified given the aforementioned challenges, the earnings growth opportunity for Sapphire is still attractive enough to warrant an investment case despite the near-term uncertainty regarding demand recovery. Reiterate 'Buy' with an SoTP-based target price of Rs 1,670..Click on the attachment to read the full report:.Sitharaman Exudes Confidence On 2024 Election Outcome, Says PM Modi To Retain Power.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Sapphire Foods - Business Model Intact; Equally Focused On Both Formats: Motilal Oswal

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