KFC and Pizza Hut operator Sapphire Foods India shares made a strong listing on the stock exchanges on Thursday, despite the overall weak market momentum. Shares of Sapphire Foods opened for trading at Rs 1,311 apiece, up 11.10% or Rs 131 per share from the issue price of Rs 1,180 per share. At the time of listing, the company had a market capitalisation of Rs 8,330.43 crore. The IPO (initial public offering) of Sapphire Foods was concluded earlier this month. During the three-day bidding process, Sapphire Foods India IPO was subscribed 6.62 times.

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Sapphire Foods’ initial public offering was entirely offer-for-sale (OFS) of 1.75 crore equity shares by promoters and existing shareholders. The company had fixed a price band of Rs 1,120-1,180 per equity share. Analysts said that Sapphire Foods has seen losses in the past few periods (FY19-20) and the financials have not been great.

Sapphire Foods has seen its net sales fall from Rs 1,193 crore in the financial year 2018-19 to Rs 1,019 crore in the previous fiscal year. The company has reported losses in the last three years with EBITDA margin of 12.2%. As of Sep 2021, the company operates 219 stores of KFC, around 261 stores of Pizza Hut and 2 stores of Taco Bell. Among key QSR brands of India, the majority of market share is held by players like Domino’s, McDonalds, KFC, Pizza Hut & Burger King. KFC is the largest QSR chain serving chicken in India.

Analysts at ICICI direct Research said that the QSR chain sub-segment of the food services industry is very competitive. The company competes primarily with international QSR chains operating in India, Sri Lanka and Maldives, such as McDonald’s, Burger King, Domino’s Pizza and Subway, as well as local restaurants and restaurant chains in the QSR segment. “These QSR chains have been introducing food products that cater to the local palate while maintaining their core offerings,” analysts said.

Sapphire Foods has leading QSR brands in its portfolio of restaurant operations and enjoys a substantial presence in the QSR space in the geographical markets of India and Sri Lanka. Sapphire Foods, set up in 2015, is one of the Yum brand’s restaurant operators in the Indian subcontinent. It monitors the quality of customer experience through a sophisticated Guest Experience Survey (GES) system, a third-party tool used around the world to measure customer satisfaction.