Sapphire Foods stock decline 5% on listing price; buy, sell or hold—What should investors do in this counter?

Shares of Sapphire Foods were trading with loss of 5% against the listing price at around 11.40 am. Sapphire Foods stocks were listed on bourses at 11% premium at Rs 1311 per share against its issue price of Rs 1180 on the Bombay Stock Exchange (BSE) on Thursday.

At around 11.45 am, Sapphire Foods stocks were trading at Rs 1244.95, down Rs 66.05 from the listing price. Earlier, soon after listing, the shares surged to Rs 1383.60, up Rs 72 from the listing price.  

As the omni-channel restaurant operator and the largest franchisee of Yum Brands in the Indian sub-continent made decent listing, experts suggest it to hold for long-term horizon.  
Speaking about Sapphire Foods India (SFIL) stock market debut, Amarjeet Maurya, AVP, Mid-Caps, Angel One Ltd, said, " Today Sapphire Foods India (SFIL) is listed and trading at 2% above its upper price band. In terms of valuations, SFIL is trading at 7.5x (FY21 EV/Sales) which is low compared to its peers Devyani International (FY21 EV/Sales -18.1x). Further,

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Sapphire Foods India has a better revenue per store compared to Devyani International. On the EBITDA front, the company is continuously showing improvement."
Considering the company's business model and trading at discount compared to its peers, we recommend 'buy' on rating stock for the long-term horizon, said the analyst.  
Sapphire was listed with moderate gain in line with our expectations, said Santosh Meena, Head of Research, Swastika Investmart Ltd.

Meena said Sapphire food is a loss-making company, however, we have seen successful companies in the market from similar spaces. If we talk about the valuations then it is coming out with 7XFY21 sales, while recently listed Devyani international is trading at 14XFY21, therefore it is coming out with attractive valuations compared to its peers, said the analyst.  

"Also, it has strong brand names under its umbrella. Aggressive investors can hold this stock for 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 1500," said Santosh Meena.  

Earlier, Zee Business Managing Editor Anil Singhvi had recommended to apply for this issue with long-term vision. Counting positives of the company, the Market Guru said, it has strong brands like KFC and Pizza Hut under its belt. Besides, impressive track record, strong growth potential, profitable at operational level and reasonable valuations would work for this IPO, said Anil Singhvi.  

Sapphire Foods, an omni-channel 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.

The three-day initial public offer (IPO) of KFC, Pizza Hut operator's Sapphire Foods India Limited opened for public subscription on November 9, 2021, and closed on November 11, 2021.