Sapphire Foods Q1 Results: Stock ends higher despite net loss, margin contraction

Shares of Sapphire Foods India Ltd. ended higher on Wednesday, July 23, despite reporting a net loss for the June quarter, compared to a net profit last year.

The operator of KFC stores reported a net loss of ₹2 crore in the June quarter compared in comparison to a net profit of ₹8.5 crore in the same period last year.

Its revenue increased by 8.2% to ₹776.8 crore from ₹718.2 crore in the previous year.

The company's earnings before interest taxes depreciation and amortisation (EBITDA) declined 9.1% to ₹112.9 crore from ₹124.1 crore in the year-ago period.

Sapphire Foods' margins contracted to 14.5% from 17.3% in the previous year. The company's EBITDA margins were impacted by operating de-leverage, lower gross margin and higher delivery mix.

Its other expenses increased 12.7% to ₹308.3 crore from ₹273.5 crore in the first quarter last fiscal.

KFC's same sales store growth for the June quarter was flat. Its same store transactions grew in low-single digits. Pizza Hut's same sales store growth declined 8% from the previous year.

Sapphire Foods added a total of 11 stores in the first quarter — eight KFC outlets, two Pizza Hut outlets and one Pizza Hut outlet in Sri Lanka.

Same store sales growth in Sri Lanka was up 12%. However, margin leverage was impacted by higher wages.

The second quarter is set to be a seasonally soft one for KFC due to the month of Shraavan, when those following it refrain from eating non-vegetarian meals.

Potential developments around the consolidation of Yum Franchisers are also a key challenge.

Shares of Sapphire Foods recovered from the lows of the day to end 0.5% higher at ₹337. The stock is down 2.5% so far in 2025.