Financial Performance

Sapphire Foods India Limited reported challenging financial results for FY 2025-26, with standalone revenue growth of 8.03% to ₹26,511.99 million but a net loss of ₹484.60 million, significantly wider than the ₹63.20 million loss in FY25. The performance was impacted by exceptional items totaling ₹234.70 million, including ₹92.17 million for merger-related expenses and ₹142.53 million for statutory impacts of new labor codes. Consolidated results showed a net loss of ₹319.63 million compared to a profit of ₹192.53 million in the previous year.

Operational Highlights

The company operated 1,052 restaurants across India and Sri Lanka, achieving 9% YoY growth in restaurant count and 8% growth in restaurant sales to ₹31,159 million. KFC India remained the strongest performer with 575 restaurants and 11% revenue growth to ₹21,136 million, while Pizza Hut India saw a 7% decline to ₹5,065 million. Sri Lanka operations showed robust 18% growth to ₹5,008 million.

Major Corporate Development

The Board approved a significant merger proposal with Devyani International Limited on January 1, 2026, aiming to create India's largest restaurant operator. The scheme of arrangement proposes an exchange ratio of 177 Devyani shares for every 100 Sapphire Foods shares, with an appointed date of April 1, 2026, subject to regulatory approvals.

Financial Position and Contingencies

The balance sheet shows total assets of ₹29,324.63 million with significant lease liabilities of ₹13,250.36 million. The company faces substantial contingent liabilities of ₹1,554.46 million, primarily from GST disputes across multiple states including a major ₹1,127.13 million demand from the Additional Commissioner, Chennai South Commissionerate for FY 2017-18 to 2021-22.

Regulatory and Governance Matters

The company shifted its registered office from Maharashtra to Haryana and scheduled its 17th AGM for July 21, 2026. Auditors Deloitte Haskins & Sells issued an unmodified opinion on the financial statements. The company maintained strong ESG credentials, ranking as India's No. 1 QSR and global No. 3 in DJSI ESG scores.

Capital Structure and Shareholding

Equity share capital stood at ₹642.77 million comprising 321,382,905 shares of ₹2 each. The company issued 192,011 equity shares during FY26 through ESOP exercises. Shareholding pattern shows promoters at 26.07%, FIIs 28.98%, Mutual Funds 31.33%, and public at 4.66%.

Forward Outlook

The merger with Devyani International is expected to enhance operational efficiency and decision-making. The company aims to expand its consumer base from ~40-45 million to over 100 million users in the next five years, with continued expansion of 60-80 KFC stores annually, despite the challenging operating environment and increased expenses impacting FY26 performance.