Buy, sell or hold: What should you do with Sapphire Foods shares?

The scrip debuted at Rs 1,350 on the National Stock Exchange (NSE), a premium of 14.4 per cent over its price of 1,180. Meanwhile, on BSE, the counter got listed at a premium of 11 per cent at Rs 1,311. The company, which operates QSRs like KFC, Pizza Hut and Taco bells in India, Sri Lanka and Maldives, preponed its listing by a day.

Amid the scrip’s rangebound moves, D-Street analysts mulled how should investors position themselves in the counter.

According to Vikas Jain, Senior Research Analysts at Reliance Securities, investors can book partial profits at the current prices, considering the weakness in the broader markets.

“The weakness in broader markets is likely to dent sentiments further. Investors looking to buy fresh positions may enter near the issue price, with a longer-term view,” Jain said.

The initial stake sale of Sapphire Foods India was open for subscription between November 9-11. The company sold its shares in the range of Rs 1,120-1,180 apiece. The multi-franchise QSR operator raised Rs 2,073 crore through its initial stake sale as the company offered 96,63,468 equity shares in the bidding process.

Amarjeet Maurya, AVP Mid Caps, Angel One said Sapphire Foods India said the company has a better revenue per store compared to Devyani International. “Considering the company’s business model and given the scrip is trading at a discount compared to its peers, we recommend holding the stock for the long-term horizon,” Maurya said.

Meanwhile, Santosh Meena, Head of Research, Swastika Investmart said the company’s valuations are attractive compared to its peers and it has strong brand names under its umbrella.

“Aggressive investors can hold this stock for the long term as the business outlook is encouraging while short-term traders can keep a stop loss of Rs 1,100 for the near term target of Rs 1,500,” he added.

The IPO was subscribed 6.62 times overall. The portion reserved for retail investors was subscribed 8.7 times, whereas the quota for institutional investors received 3.46 times bids. Non- institutional buyers’ allocation was subscribed 7.50 times.

Akhil Rathi, Vice President Advisory at Marwadi Shares and Finance said that Sapphire Food’s strategy to reduce store size for KFC and Pizza Hut is positive for the company along with the expansion of new stores. Given the company’s substantial market presence and a scalable new restaurant economic model for expansion, Rathi advised investors to hold the stock for the long term.

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.