Shares in Sapphire Foods India, which operates KFC and Pizza Hut outlets in India, listed at a premium of 14 percent over the issue price on Thursday. Sapphire Foods' Rs 2,073-crore IPO, which was open for subscription from November 9 to 11, saw a subscription of 6.6 times the shares on offer.
Shares were available for bidding in a price band of Rs 1,120-1,180 apiece under the IPO.
Sapphire Foods, an omnichannel restaurant operator and the largest franchisee of Yum Brands in the Indian sub-continent, is backed by marquee investors such as Samara Capital, Goldman Sachs, CX Partners and Edelweiss.
Read Here: Sapphire Foods makes strong debut on bourses; KFC, Pizza Hut operator lists at 14% premium
The initial share sale of Sapphire Foods India was solely an offer for sale (OFS) by promoters and existing shareholders. In the qualified institutional buyer (QIB) category, the IPO was subscribed 7.5 times, while the non-institutional investor category was booked 3.5 times. The quota reserved for retail investors was subscribed 8.7 times.
Speaking on the company's plans for restaurant expansion, CFO Vijay Jain said, “Our expansion during initial years was slow, simply because we were getting our omnichannel model right, our profitability right. Now that we are confident about it, we have gone on an expansion spree. We have been aggressive on expansion even during COVID times."
He also said the company opened 27 restaurants in H2 last year. "This year, already, we have opened 46 restaurants in June, and within that Q2, we have opened 32 restaurants.”
Speaking on funding of expansion, Jain said, “A few months back, we had a private placement round, where we raised Rs 474 crore primary capital. So a lot of cash is sitting on the balance sheet. Plus, we are an EBITDA-profitable company."
"We have internal accruals and highly underleveraged in terms of our debt position... only 70 crore on the books. So all these three things will actually enable us to go forward and expand aggressively on both fronts, organic as well as inorganic,” he added.
As of March 31, 2021, Sapphire Foods owned and operated 204 KFC restaurants in India and the Maldives, 231 Pizza Hut restaurants in India, Sri Lanka and the Maldives, and two Taco Bell restaurants in Sri Lanka.
“On the inorganic side, it will actively look for acquisitions in QSR, scalable QSR brands; they can be in complementary categories, either in India or outside India as well. All our expansion plans for KFC and Pizza Hut for the next few years are taken care of in terms of our internal accruals as well as the cash on the balance sheet; how much it will be available for the inorganic growth would depend upon the size of the opportunity, so very difficult to commit at this point in time,” he said.
Speaking on Sapphire Foods' business, Whole-Time Director and Group CEO Sanjay Purohit said, “The first couple first six months were quite bad for the entire industry but now we are seeing a fairly strong recovery. In the second half of FY21, we saw a strong recovery. Our delivery says post-COVID have increased quite substantially compared to pre-COVID and today we are seeing dine-in also come back very strongly.”
For full management commentary, watch the video.
Text inputs from PTI