Stock Report

Update on Sri Lanka Operations of Sapphire Foods India Limited

Posted On : 2022-04-14 12:12:02( TIMEZONE : IST )

Update on Sri Lanka Operations of Sapphire Foods India Limited

Gamma Pizzakraft Lanka (Pvt.) Ltd.("Gamma Pizzakraft"), a subsidiary of Sapphire Foods India Limited, has been successfully operating in Sri Lanka since 1993. Sri Lanka has been going through difficult times over the last financial year on account of rising prices, depletion of forex reserves and shortage of fuel. However, recent steps taken by the Sri Lankan Government including commencement of the dialogue with IMF for a financial assistance, are positive signs of a sustainable solution to the ongoing crisis.

Sapphire Foods, through Gamma Pizzakraft Lanka (Pvt) Ltd, is the largest international QSR chain of Sri-Lanka, in terms of revenue for the financial year 2021 and number of restaurants operated as of March 31, 2021 (Source: Technopak Report).

Despite the recent macroeconomic challenges, Gamma Pizzakraft has continued to fare exceedingly well on business parameters owing to strong consumer sentiment for the brand Pizza Hut, our operational capabilities, Omni channel store format, digital and own delivery capabilities, leadership, strong team culture and support from Indian parent entity. This has been demonstrated by the team delivering our best ever financial performance in Q3'FY22 and YTD Dec FY22 results.

This business momentum has continued in Q4'FY22 (In LKR terms) with system sales growth of ~ 70%, SSSG of ~ 40%, SSTG of ~ 30% (vis a vis Q4'FY21), ADS growth of ~ 45% (over FY 20 pre-Covid levels) with 6 restaurant additions in the quarter. Business continues to do well in April'22 (Till date). As a result, the Pizza Hut continues to be a leading brand in the QSR space in Sri Lanka.

We have undertaken the following measures to mitigate the situation:

- We are working closely with our international vendors for availability of raw materials. Further, Sapphire Foods India Limited, as a parent entity, continues to provide all the necessary support and resources including additional foreign currency support.

- Business continues to take appropriate pricing interventions to manage the inflationary pressures while remaining competitive in the marketplace.

- Our Omni channel strategy and lean store operational structure along with cost control initiatives have mitigated profitability pressures.

- Lastly, the competency and experience of the leadership team and their decades of experience in the brand/ business have enabled the business to navigate through the current turbulence.

While the Sri Lanka business is delivering strong financial performance in local currency terms, the currency devaluation of LKR will have an impact while consolidating accounts at the entity level in Indian currency.

We continue to monitor the situation and in case of any material updates, the same would be intimated to the stock exchanges for further dissemination, in accordance with the applicable laws/regulations.

Note: The information contained herein with respect to Q4'FY22 is provisional and being released ahead of the official publication of the financial results for the period ended March 31, 2022 which is subject to audit by the Statutory Auditors and review/approval by the Audit Committee and the Board of Directors of the Company.

Shares of Sapphire Foods India Limited was last trading in BSE at Rs. 1271.25 as compared to the previous close of Rs. 1251.70. The total number of shares traded during the day was 2421 in over 582 trades.

The stock hit an intraday high of Rs. 1284.45 and intraday low of 1258.55. The net turnover during the day was Rs. 3074997.00.

Source : Equity Bulls


SapphireFoodsIndia INE806T01012 Restaurants GammaPizzakraftLanka SriLanka