Kotak picks India's Sapphire Foods as preferred QSR stock

Sapphire Foods India

11/01/2024 07:34

** Kotak Institutional Equities picks Sapphire Foods
 SAPI.NS  as its preferred stock in quick service restaurants 
(QSR) space
    **  SAPI, which rose 6.3% in 2023, marginally down at 1,446
rupees; has avg "buy" rating- LSEG data
    ** SAPI, a franchise of Yum Brands  YUM.N , offers good
growth at reasonable valuations with weaker sales trend in
industry - Kotak
    ** Brokerage says demand weakness that hit QSR industry in
November 2022 has continued due to broader slowdown in
discretionary consumption
    ** Adds same-store sales growth remained subdued in Q3
despite a weak base, late festive season and Cricket World Cup
    ** Combination of aggressive store additions and demand
weakness has weighed on profitability of QSR cos in FY24- Kotak
    ** Cuts FY2024-26 EBITDA estimates across cos like Jubilant
Industries  JUBL.NS , Westlife Foodworld  WEST.NS , Sapphire,
Devyani International  DEVY.NS , Restaurant Brands Asia
 RESR.NS  by 5-11%



 (Reporting by Sethuraman NR in Bengaluru)
 ((Sethuraman.NR@thomsonreuters.com; (+91 9945291420); Reuters
Messaging: nallur.sethuraman.thomsonreuters.com@reuters.net))