Sapphire Foods India Limited has informed the Exchange about Investor Presentation
:
Date
November 08, 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 FY24 Q2 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 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 – NOV’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)
₹ 6,414 MN Q2 FY24 Restaurant Sales
18.2% [18.4%] Q2FY24 EBITDA margin ₹ 1,166 MN [1,032] Q2FY24 EBITDA
18.5% [19.4%]* 6MFY24 EBITDA margin ₹ 2,391 MN [2,146]* 6MFY24 EBITDA
814 Total Restaurants Across India, Sri Lanka and Maldives (3)
383 KFC Restaurants (2) 422 Pizza Hut Restaurants (2) 9 Taco Bell Restaurants (2)
Omni Channel Mix (3)
Delivery 40%
Dine-in 40%
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 Sep 30, 2023; (3) Pertains to Q2 FY24
4
SAPPHIRE FOODS: GEOGRAPHICAL PRESENCE (1)
JOURNEY OF SAPPHIRE FOODS BUILT A PLATFORM OF 814 OUTLETS (1)
381
311
Restaurants Cities
104
72
122
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
23 Cities where 344 restaurants of both KFC and Pizza Hut are operated
Maldives
KFC 2 PH 2
PH – 68 TB – 2
Sri Lanka
PH – 109 TB – 9
Source: Company data, Technopak Industry Report (1) As of Sep 30, 2023. Includes 4 restaurants in Maldives (2) GDP contribution of states In FY19 where Pizza Hut and KFC restaurants are located; (3) In FY20
5
55
KFC – 9 KFC – 6 PH – 7 PH – 7
62
14
21
KFC – 19 PH – 30
KFC – 14 PH – 10
KFC – 8 PH – 4
KFC – 88 PH – 82
30
7
55
10
KFC – 91 PH – 49
27
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: JOURNEY POST LISTING
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
8
SUMMARY CONSOLIDATED FINANCIALS Q2 & 6M FY24
Note: YoY Q2 PAT is not comparable because there was no tax expense for SFIL in Q2 FY23. In Q2 FY24 there is deferred tax expense without any cash outflow. # FY23 annual PAT includes Deferred Tax Credit (DTC) of ₹1253 mn towards carried forward losses and deductible temporary differences in SFIL. FY23 annual Adj. PAT before DTC is ₹1402 mn (6.2%). Adj. PAT for Q2 FY24 is ₹215 mn (3.4%). Adj. EBITDA and Adj. PAT is before Ind-AS 116 adjustments
9
ParticularsQ2 FY24Q2 FY236M FY246M FY23FY23Restaurant Sales ₹ mn 6,4145,60414%12,93911,04017%22,571Adj. EBITDA ₹ mn6786249%1,4501,3468%2,647%10.6%11.1%-50 bps11.2%12.2%-100 bps11.7%EBITDA ₹ mn1,1661,03213%2,3912,14611%4,343%18.2%18.4%-20 bps18.5%19.4%-90 bps19.2%PBT ₹ mn214269-21%550626-12%1,084%3.3%4.8%-150 bps4.3%5.7%-140 bps4.8%PAT ₹ mn #152269-43%401650-38%2,332%2.4%4.8%-240 bps3.1%5.9%-280 bps10.3%Restaurant Additions36427179164Change YoYChange YoY OPERATIONAL & FINANCIAL OVERVIEW
NUMBER OF RESTAURANTS
Gross Restaurant Additions
Restaurant Closures
(INR mm)
154
579
170
743
43
658
57
715
31
743
39
778
42
814
31-Mar-22
31-Mar-23
30-Sep-22
31-Dec-22
31-Mar-23
30-Jun-23
30-Sep-23
12
6
1
0
3
4
6
32% increase
22,571
17,154
RESTAURANT SALES
5,604
5,939
5,592
14% Increase on Y-O-Y
6,526
6,414
FY22
FY23
Q2FY23
Q3FY23
Q4 FY23
Q1FY24
Q2FY24
10
PROFITABILITY OVERVIEW
GROSS MARGIN %
69.6%
67.6%
66.7%
67.3%
68.1%
68.7%
68.9%
220 bps YoY
FY22
FY23
Q2 FY23
Q3 FY23
Q4 FY23
Q1 FY24
Q2 FY24
RESTAURANT EBITDA (₹ MN / %)#
17.6%
*
3,025
17.4%
3,929
FY22
FY23
16.8%
940
Q2FY23
18.1%
1,070
Q3FY23
16.2%
910
Q4FY23
17.2%
1,128
Q1FY24
70 bps YoY
16.1%
▲10% YOY
1,037
Q2FY24
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
11
PROFITABILITY OVERVIEW
ADJ. EBITDA (₹ MN / %)#
11.7%
2,647
9.4%
*
1,614
11.1%
624
12.4%
738
10.1%
563
11.8%
772
50 bps YoY
10.6%
678
▲9% YOY
FY22
FY23
Q2 FY23
Q3 FY23
Q4 FY23
Q1 FY24
Q2 FY24
EBITDA (₹ MN / %)
17.8%
*
3,054
19.2%
4,343
FY22
FY23
18.4%
1,032
Q2FY23
19.6%
18.4%
1,167
Q3FY23
1,030
Q4FY23
18.8%
1,224
Q1FY24
18.2%
20 bps YoY
▲13% YOY
1,166
Q2FY24
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: Double Down
Burger
+
Value - Range of Snackers at ₹99/-
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, 2021 / FOR FY21
AS OF MAR 31, 2022 / FOR FY22
AS OF MAR 31, 2023 /FOR FY23
AS OF SEP 30, 2023 /FOR 6MFY24
Total Restaurant Count
Average Daily Sales per Restaurant (INR‘000s)
Restaurant Related Revenue (in INR mm)
203
106
263
130
341
135
381
131
5,897
24%
10,349
75%
14,529
40%
8,451
20% YoY
Restaurant EBITDA (in %)
14.0%
100 bps
18.7%*
470 bps*
19.4%
70 bps
20.0%
90 bps YoY
Net restaurant additions of 23 in Q2 FY24.
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 INDIA SPECIFIC PLANS NEXT 6-12 MONTHS
Build Brand Salience
▪ Product Innovation
: Large Pizza (launched initially in 2 states) : Detailed innovation pipeline (6-12 months)
▪ Enhanced marketing spends
(over & above mandated agreement)
Grow Dine-In Sales
Operations ▪ Speed of service & quality of customer experience:
investment in Dragon Tail tech (intelligent kitchen production planning tool) to enable serving of hot & fresh pizzas
Customer ▪ Reinforcement of Pizza Hut’s Dine-In experience
through curated deals via analytics and CRM
▪ Build Lunch Dine-In occasion: launch of attractive combos
Our focus is to continually improve operational execution and customer experience
Strengthen Home Service
▪ Building late night occasions:
65% of our stores now deliver 2 a.m. and beyond
▪ Delivering ‘Hot & Fresh’ pizzas: Dragon Tail integration with Aggregator platforms to improve customer experience and ratings
Real Estate Strategy (existing/new restaurants)
▪ Cautious expansion of new restaurants ▪ 3-5% portfolio corrections:
closure of long non-performing restaurants
▪ 12-15% restaurants refurbishments: enhanced customer
experience
▪ Restaurant Capex Optimisation: Process reengineering on
back-end
As consumer demand improves, the execution as above will hold us in good stead
16
CORE COMPOSITION OF OUR BUSINESS: PIZZA HUT INDIA
AS OF MAR 31, 2021 /FOR FY21
AS OF MAR 31, 2022 / FOR FY22
AS OF MAR 31, 2023 / FOR FY23
AS OF SEP 30, 2023 / FOR 6MFY24
Total Restaurant Count
Average Daily Sales per Restaurant (INR‘000s)
Restaurant Related Revenue (in INR mm)
162
48
219
57
286
58
311
50
2218
34%
3,710
67%
5,214
41%
2,692
2% YoY
Restaurant EBITDA (in %)
5.0%
220 bps
11.4%
640 bps*
13.3%
190 bps
8.3%
660 bps YoY
Net restaurant additions of 9 in Q2 FY24.
Source: Company data *Restaurant EBITDA % is Normalized for additional incentives accrued in that period.
17
CORE COMPOSITION OF OUR BUSINESS: SRI LANKA OPERATIONS
AS OF MAR 31, 2021 / FOR FY21
AS OF MAR 31, 2022 / FOR FY22
AS OF MAR 31, 2023 / FOR FY23
AS OF SEP 30, 2023 / FOR 6M FY24
Total Restaurant Count
Average Daily Sales per Restaurant (INR‘000s)
70
94
95
108
114
72
118
81
Restaurant Related Revenue (in INR mm)
1,966
4%
2,983
52% (INR) 60% (LKR)
2,716
9% (INR) 48% (LKR)
1,689
Restaurant EBITDA (in %)
19.6%
340 bps
22.0%
240 bps*
14.8%
720 bps
14.2%
Net restaurant additions of 4 in Q2 FY24
Source: Company data *Restaurant EBITDA % is Normalized for additional incentives accrued in that period.
YoY 28% INR) 8% (LKR)
YoY 100 bps
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 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
rowth
G c ni
Orga
Pursue
I n o r g
anicGrowth
Explore acquisition of high quality and scalable QSR and food brands in existing and new geographies..
Capability + Capital Cash net of debt of Rs. 2,333 Mn as on 30th Sep 23
20
SCALABILITY IN FOOD BUSINESS
21
MANAGEMENT TEAM
RIGHT PEOPLE IN KEY SEATS
MANAGEMENT TEAM WITH DIVERSE EXPERIENCES
Deepak Taluja CEO – KFC
Vikrant Vohra CEO – Pizza Hut
Vijay Jain CFO
Nandita Bapat Head - Projects
Amar Patel Chief Tech Officer
Ashu Khanna Head Supply Chain
Niraj Patil Head Legal and Liaison
Puneet Bhatia Head Business Development
Source: Company data
22
BOARD OF DIRECTORS
OUR DIRECTORS
Sunil Chandiramani Chairman and Independent Director
Sanjay Purohit Whole Time Director and Group CEO
Sumeet Narang Non-Executive Nominee Director
Deepa Wadhwa Independent Director
Vinod Nambiar Non-Executive Nominee Director
Vikram Agarwal Non-Executive Nominee Director
Annu Aggarwal Independent Director
Nobert Fernandes Non-Executive Nominee Director
Kabir Thakur Non-Executive Nominee Director
INTERNAL AUDIT
STATUTORY AUDIT
ESG
Protiviti
EY
Assisted by PWC
Source: Company data
23
SHAREHOLDING PATTERN
Shareholding Pattern (As on 30th Sep 2023)
% Holding
Promoters & Promoter Group
Foreign Portfolio Investors / Non-Resident Indians
Domestic
Mutual Funds
Insurance Companies
Alternate Investment Funds
Resident Individuals
Others
Total
Source: Company data
41.7
24.1
34.2
21.8
4.8
1.5
5.2
0.9
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. Bhavya Shah
Email ID: bhavya.shah@linkintime.co.in
Email ID: rahul.kapoor@sapphirefoods.in
www.sapphirefoods.in
+91 8082748577
www.orientcap.com