Sapphire Foods India Limited has informed the Exchange about Investor Presentation
:
Date
May 18, 2023
National Stock Exchange of India Limited To,
BSE Limited
Exchange Plaza, Block G, C/1, Bandra Kurla Complex, Bandra (E), Mumbai – 400051
Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai – 400001
Symbol: SAPPHIRE
Scrip Code: 543397
Dear Sir/Madam, Subject: Corporate Presentation
Pursuant to the Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, please find enclosed herewith Corporate Presentation.
Corporate
The website also (https://www.sapphirefoods.in/investors-relation/corporate-presentation) under FY23 Q4 section.
Presentation
Company’s
available
on
is
Request you to kindly take the same on record.
For Sapphire Foods India Limited Thanking you,
Sachin Dudam Company Secretary and Compliance Officer
Encl: a/a
Sapphire Foods India Limited (formerly known as Sapphire Foods India Private Limited) CIN: L55204MH2009PLC197005
+91 022 67522300 info@sapphirefoods.in www.sapphirefoods.in 702, Prism Tower, A-Wing, Mindspace, Link
Road, Goregaon (W), Mumbai- 400062
Sapphire Foods India Limited SAPPHIRE FOODS INDIA LIMITED 3Q FY22 Earnings Presentation CORPORATE PRESENTATION – MAY’23
February 2022
1
SAFE HARBOR
This presentation and the accompanying slides (the “Presentation”), which have been prepared by Sapphire Foods India Limited (the “Company”), have been prepared
solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis or be
relied on in connection with any contract or binding commitment what so ever. No offering of securities of the Company will be made except by means of a statutory offering
document containing detailed information about the Company.
This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or
warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this
Presentation. This Presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or
any omission from, this Presentation is expressly excluded
Certain matters discussed in this Presentation may contain statements regarding the Company’s market opportunity and business prospects that are individually and
collectively forward-looking statements. Such forward-looking statements are not guarantees of
future performance and are subject
to known and unknown risks,
uncertainties and assumptions that are difficult to predict. These risks and uncertainties include, but are not limited to, the performance of the Indian economy and of the
economies of various international markets, the performance of the industry in India and world-wide, competition, the company’s ability to successfully implement its strategy,
the Company’s future levels of growth and expansion, technological implementation, changes and advancements, changes in Restaurant Sales, income or cash flows, the
Company’s market preferences and its exposure to market risks, as well as other risks. The Company’s actual results, levels of activity, performance or achievements could
differ materially and adversely from results expressed in or implied by this Presentation. The Company assumes no obligation to update any forward-looking information
contained in this Presentation. Any forward-looking statements and projections made by third parties included in this Presentation are not adopted by the Company and the
Company is not responsible for such third party statements and projections.
2
TABLE OF CONTENTS
1
2
3
4
5
SAPPHIRE FOODS AT A GLANCE
FINANCIAL OVERVIEW
SEGMENTAL PERFORMANCE KFC INDIA PIZZA HUT INDIA SRI LANKA BUSINESS UNIT ECONOMICS
▪ ▪ ▪ ▪
GROWTH STRATEGY
MANAGEMENT, BOARD & SHAREHOLDING PATTERN
Page 4-6
Page 7-12
Page 14-15 Page 16-17 Page 18 Page 19
Page 20-21
Page 22-24
3
SAPPHIRE FOODS AT A GLANCE
YUM’s Franchisee Operator in India, Sri Lanka and Maldives
Sri Lanka’s Largest International QSR chain (1)
₹ 5,592 MN Q4 FY23 Restaurant Sales
18.4% [21.0%] Q4FY23 EBITDA margin ₹ 1,030 MN [1,036] Q4FY23 EBITDA
19.2% [17.8%]* FY23 EBITDA margin ₹ 4,343 MN [3,054]* FY23 EBITDA
743 Total Restaurants Across India, Sri Lanka and Maldives (3)
342 KFC Restaurants (2) 392 Pizza Hut Restaurants (2) 9 Taco Bell Restaurants (2)
Omni Channel Mix (3)
Delivery 39%
Dine-in 41%
Take-away 20%
Source: Company data, Technopak industry report *FY22 EBITDA% and ₹ value is Normalzed for additional incentives accrued in that period (1) In terms of Restaurant Sales for FY21 and number of restaurants operated as of March 31, 2021; (2) As of Mar 31, 2023; (3) Pertains to FY23
4
SAPPHIRE FOODS: GEOGRAPHICAL PRESENCE (1)
JOURNEY OF SAPPHIRE FOODS BUILT A PLATFORM OF 743 OUTLETS (1)
341
286
Restaurants Cities
90
66
114
52
INDIA
SRI LANKA
~ KFC and Pizza Hut Brands Operate in States that cover 56% of GDP (2) KFC and Pizza Hut present in 10 and 11 states of India respectively
KFC and Pizza Hut present in 5 and 6 of the Top 8 cities of India respectively
Top 8 Cities in India contribute 87% of
Chain Food Services Market (3)
Pizza Hut, KFC Pizza Hut, Taco Bell
Pizza Hut only
KFC only
21 Cities where 316 restaurants of both KFC and Pizza Hut are operated
Maldives
KFC 1 PH 1
Sri Lanka
PH – 105 TB – 9
Source: Company data, Technopak Industry Report (1) As of Mar 31, 2023; (2) GDP contribution of states In FY19 where Pizza Hut and KFC restaurants are located; (3) In FY20
5
47
KFC – 9 PH – 7
58
11
19
KFC – 15 PH – 36
KFC – 13 PH – 8
KFC – 6 PH – 3
KFC – 81 PH – 69
6
49
32
7
KFC – 82 PH – 43
26
THE SAPPHIRE STORY
Two global brands (KFC & Pizza Hut) with Scale & PAT profitability among Top 3 QSR operators
Capability and capital to rapidly drive organic and inorganic growth plans
Value based work culture, high on governance enabled by professional management, board and promoters
Execution Mindset Great Customer experience along with Superior Back-end operational excellence
Optimal capital allocation drives new restaurant expansion model - focus on smaller sized omni-channel restaurants
6
FINANCIAL OVERVIEW
SAPPHIRE FOODS: FY23 HIGHLIGHTS
No. of Restaurants
Restaurant Sales ₹ Mn
Adj. EBITDA ₹ Mn / %
Adj. PAT ₹ Mn# / %
29%
32%
64%
207%
33%
437
FY21
579
FY22
69%
17,154
323%
10,160
FY21
3.8%
382
FY21
-8.3%
-840
FY21
FY22
9.4%
1,615
* FY22
2.7%
457
FY22
*
2-Year CAGR
30%
743
FY23
22,571
49%
FY23
11.7%
2,647
FY23
6.2%
1,402
FY23
163%
NA
Adj. EBITDA and Adj. PAT is before Ind-AS 116 adjustments * Adj. EBITDA and Adj. PAT for FY22 have been normalized for additional incentive from Yum accrued in that year # Adj PAT excludes Deferred Tax Credit (DTC) of ₹1253 mn towards carried forward losses in SFIL in FY23. Post DTC the Adj PAT is ₹2,654 Mn
FY23 - Best Ever Annual Performance
Highest Restaurant Sales: ₹22.6 Bn
Highest Adj. EBITDA: ₹2.6 Bn and Highest margin of 11.7%
Highest Adj. PAT (before DTC): ₹1.4 Bn and Highest margin of 6.2%
Highest New Restaurant Additions: 164
Best Ever Year for KFC and Pizza Hut India (Rest. Sales and Rest. EBTIDA% vs FY22 normalised EBITDA)
Pizza Hut Sri Lanka despite challenges, Rest. Sales grew by 48% YoY in LKR terms | No.1 QSR Brand in the Country
8
SUMMARY CONSOLIDATED FINANCIALS Q4 & FY23
*
*
*
Adj. EBITDA and Adj. PAT is before Ind-AS 116 adjustments * These numbers have been normalized for additional incentive from Yum accrued in that year # PAT includes Deferred Tax Credit (DTC) of ₹1253 Mn towards carried forward losses in SFIL in Q4 FY23. Adj. PAT before DTC is ₹187 Mn (3.3%) in Q4 FY23 and ₹1402 mn (6.2%) in FY23
9
ParticularsQ4 FY22Q4 FY23FY22FY23Restaurant Sales ₹ mn 4,9435,59213%17,15422,57132%Adj. EBITDA ₹ mn636563-11%1,6152,64764%%12.9%10.1%-280 bps9.4%11.7%230 bpsEBITDA ₹ mn1,0361,030-1%3,0544,34342%%21.0%18.4%-260 bps17.8%19.2%140 bpsPAT ₹ mn #2651,355411%2662,332777%%5.4%24.2%1880 bps1.6%10.3%870 bpsRestaurant Additions2928142164Change YoYChange YoY OPERATIONAL & FINANCIAL OVERVIEW
Gross Restaurant Additions
36
154
437
579
NUMBER OF RESTAURANTS
170
743
39
616
43
658
57
715
31
743
Restaurant Closures
(INR mm)
31-Mar-21
31-Mar-22
31-Mar-23
30-Jun-22
30-Sep-22
31-Dec-22
31-Mar-23
26
12
6
2
1
0
3
RESTAURANT SALES
32% increase 22,571
10,160
17,154
5,436
5,604
5,939
13% Increase on Y-O-Y
5,592
FY21
FY22
FY23
Q1FY23
Q2FY23
Q3FY23
Q4 FY23
10
PROFITABILITY OVERVIEW
GROSS MARGIN %
69.9%
69.6%
67.6%
200 bps
68.2%
66.7%
67.3%
68.1%
100 bps YoY
FY21
FY22
FY23
Q1 FY23
Q2 FY23
Q3 FY23
Q4 FY23
RESTAURANT EBITDA (₹ MN / %)#
17.4%
20 bps
3,929
17.6%
*
3,025
FY22
FY23
13.0%
1,321
FY21
18.5%
1,004
Q1FY23
16.8%
18.1%
940
Q2FY23
1,070
Q3FY23
16.2%
910
Q4FY23
210 bps YoY
KEY INITIATIVES
Zero-based cost budgeting leading to permanent cost reduction
PACE SETTER program for benchmarking cost amongst restaurants
Optimization of restaurant size
Increase in revenue from Delivery from 21% in FY19 to 39% in FY23
# Restaurant EBITDA is before Ind-AS 116 adjustments *Restaurant EBITDA % and ₹ Value is Normalized for additional incentives accrued in that period and YoY comparison is with Normalized numbers of FY22
11
PROFITABILITY OVERVIEW
ADJ. EBITDA (₹ MN / %)#
9.4%
*
1,614
11.7%
2,647
230 bps
13.3%
11.1%
12.4%
10.1%
722
624
738
563
280 bps YoY
FY22
FY23
Q1 FY23
Q2 FY23
Q3 FY23
Q4 FY23
17.8%
*
3,054
19.2%
4,343
FY22
FY23
EBITDA (₹ MN / %)
20.5%
140 bps
1,114
Q1FY23
18.4%
1,032
Q2FY23
19.6%
1,167
Q3FY23
18.4%
1,030
Q4FY23
260 bps YoY
3.8% 382
FY21
17.6%
1,787
FY21
KEY INITIATIVES
Zero-based cost budgeting leading to permanent cost reduction
PACE SETTER program for benchmarking cost amongst restaurants
Optimization of restaurant size
Increase in revenue from Delivery from 21% in FY19 to 39% in FY23
# Adj. EBITDA is before Ind-AS 116 adjustments *Adj.EBITDA and EBITDA % and ₹ Value is Normalized for additional incentives accrued in that period and YoY comparison is with Normalized numbers of FY22
12
SEGMENTAL PERFORMANCE
KFC BRAND PRIORITIES
+
+
Enhance Fried Chicken Category Relevance - “Let’s KFC” communication
campaign
+
Craveable Taste ‒ Innovation: Chizza, Chicken
Popcorn with Maggi, Popcorn Nachos
+
Value - Entry value innovation:
Chicken Rolls
- Abundant Value: Bucket
Options
Frictionless Customer Experience - Digital Kiosks - KFC App - Partnering with aggregators
+
Operational Excellence - 7 Minutes express pickup
+
Improve Accessibility - Double the restaurant count
in 3-4 years
14
CORE COMPOSITION OF OUR BUSINESS: KFC INDIA
AS OF MAR 31, 2020 / FOR FY20
AS OF MAR 31, 2021 / FOR FY21
AS OF MAR 31, 2022 / FOR FY22
AS OF MAR 31, 2023 /FOR FY23
Total Restaurant Count
Average Daily Sales per Restaurant (INR‘000s)
187
130
203
106
263
130
341
135
Restaurant Related Revenue (in INR mm)
7,753
5,897
24%
10,349
75%
14,529
40% YoY
Restaurant EBITDA (in %)
13.0%
14.0%
100 bps
18.7%*
470 bps*
19.4%
70 bps YoY*
Net restaurant additions of 16 in Q4 FY23 and 78 in FY23
Source: Company data *Restaurant EBITDA % is Normalized for additional incentives accrued in that period and YoY comparison is with Normalized numbers of FY22
15
PIZZA HUT BRAND PRIORITIES
+
Build Top-of-Mind Awareness - Enhance marketing investments:
+
TV campaign
Taste Leadership in Pizza category - Innovation: 10 New Pan Pizzas, 2 new Pastas, Keema Garlic Bread
+
Value - Entry level value: Flavor Fun
Pizzas
- Attractive Meal options
+
Frictionless Customer Experience - New Pizza Hut app - Self ordering Dine In table QR
+
code
Operational Excellence - Use of Technology (Dragon
Tail, Hut Bot) to simplify operations and improve customer experience
+
Improve Accessibility - Double the restaurant count
in 3-4 years
- 1000 Sft. Model for
increasing density in top 6 cities
16
CORE COMPOSITION OF OUR BUSINESS: PIZZA HUT INDIA
AS OF MAR 31, 2020 / FOR FY20
AS OF MAR 31, 2021 / FOR FY21
AS OF MAR 31, 2022 / FOR FY22
AS OF MAR 31, 2023 / FOR FY23
Total Restaurant Count
Average Daily Sales per Restaurant (INR‘000s)
Restaurant Related Revenue (in INR mm)
174
58
162
48
219
57
286
58
3,344
2,218
34%
3,710
67%
5,214
41% YoY
Restaurant EBITDA (in %)
7.2%
5.0%
220 bps
11.4%*
640 bps
13.3%
190 bps* YoY
Net restaurant additions of 12 in Q4 FY23 and 67 in FY23
Source: Company data *Restaurant EBITDA % is Normalized for additional incentives accrued in that period and YoY comparison is with Normalized numbers of FY22
17
CORE COMPOSITION OF OUR BUSINESS: SRI LANKA OPERATIONS
Total Restaurant Count
Average Daily Sales per Restaurant (INR‘000s)
Restaurant Related Revenue (in INR mm)
AS OF MAR 31, 2020 / FOR FY20
AS OF MAR 31, 2021 / FOR FY21
AS OF MAR 31, 2022 / FOR FY22
AS OF MAR 31, 2023 / FOR FY23
64
92
70
94
95
108
114
72
2,038
1,966
4%
2,983
52% (INR) 60% (LKR)
2,716
YoY 9% INR) 48% (LKR)
Restaurant EBITDA (in %)
16.2%
19.6%
340 bps
22.0%*
240 bps
14.8%
YoY 720 bps*
Net restaurant additions of 0 in Q4 FY23 and 19 in FY23
Source: Company data *Restaurant EBITDA % is Normalized for additional incentives accrued in that period and YoY comparison is with Normalized numbers of FY22
18
UNIT ECONOMICS
Avg Size of Restaurant (in Sq. ft.)
Average Daily Sales per Restaurant (in ₹ ’000)
Restaurant EBITDA %
INDIA
As of 31-Mar-19
2,736
FY19
125
FY19
12.7%
Current
~ 1,500
Reduction in Avg Restaurant size ~45%
FY23
135
FY23
19.4%
INDIA
As of 31-Mar-19
Current
~ 1,200
2,427
FY19
61
FY19
7.5%
Reduction in Avg Restaurant size ~45%
FY23
58
FY23
13.3%
In Pizza Hut 1,000 sqft. restaurants to be rolled out for densification. We expect this will be around 10-15% of our new restaurants going forward
19
WELL POSITIONED TO CAPTURE FUTURE OPPORTUNITIES
Accelerate conversion from unorganized food services to KFC and PH brands
Explore acquisition of high quality and scalable QSR and food brands in existing and new geographies..
Capability + Capital Cash net of debt of Rs. 2,623 Mn as on 31st Mar 23
20
SCALABILITY IN FOOD BUSINESS
21
MANAGEMENT TEAM
RIGHT PEOPLE IN KEY SEATS
MANAGEMENT TEAM WITH DIVERSE EXPERIENCES
Finance
KFC
Pizza Hut
People
Supply Chain
Technology
Business Development
Projects
Legal
Ashu Khanna
Source: Company data
22
BOARD OF DIRECTORS
OUR DIRECTORS
Nobert Fernandes Non-Executive Nominee Director
INTERNAL AUDIT
STATUTORY AUDIT
ESG
Source: Company data
23
SHAREHOLDING PATTERN
Shareholding Pattern (As on 31st Mar 2023)
% Holding
Promoters & Promoter Group
Foreign Company
Foreign Portfolio Investors / Non-Resident Indians
Domestic
Mutual Funds
Insurance Companies
Alternate Investment Funds
Resident Individuals
Others
Total
Source: Company data
44.9
4.8
16.0
33.3
20.9
4.6
2.0
5.8
1.0
100.0
24
THANK YOU
Company:
Investor Relations Partner:
Sapphire Foods India Limited CIN: L55204MH2009PLC197005
Mr. Rahul Kapoor
Orient Capital (a division of Link Group) Mr. Nachiket Kale
Email ID: nachiket.kale@linkintime.co.in
Email ID: rahul.kapoor@sapphirefoods.in
www.sapphirefoods.in
+91 9920940808
www.orientcap.com