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MUMBAI : Sapphire Foods India Ltd, the company that operates KFC, Pizza Hut and Taco Bell fast food chains, on Thursday made a muted debut on stock exchanges.

The stock opened at 1,311 a share, hit a high of 1,383.60 on the BSE and gained as much as 17% intraday.

At closing, however, the scrip settled at 1,216.05 on the BSE, up 3.06% from its issue price of 1,180.

Sapphire Foods is one of YUM’s franchisees in the Indian subcontinent.

As of the first quarter of FY22, it owned and operated 209 KFC outlets in India and the Maldives, 239 Pizza Hut restaurants in India, Sri Lanka and the Maldives, and two Taco Bell restaurants in Sri Lanka.

Devyani’s 692 stores generated 1,135 crore in FY21, while Sapphire’s 437 stores generated 1,081 crore in sales. Operationally, Sapphire’s stores are generating more revenue per store. But Sapphire’s operating profit margin was 18% versus 26% by Devyani in FY21.

“The issue is a complete OFS (offer for sale). The company is a replica of Devyani in terms of business and brands. [It] seems relatively cheap [Sapphire’s 6.9x price-to-sales (P/S) looks cheaper compared with Devyani’s 15.5x P/S which is in the exact same business] but as a whole as in the whole QSR segment, there is no margin of safety in the valuations," said Aditya Kondawar, chief operating officer, JST Investments.

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