Market Overview and Key Updates
On Friday, the benchmark indices opened lower, reflecting the impact of weak global cues. The Nifty began trading below the 25,000 mark at 24,789, while the Sensex was down by over 500 points.
Company Earnings Reports:
- Titan Company, Hindustan Zinc, Britannia Industries, GlaxoSmithKline Pharmaceuticals, UPL, LIC Housing Finance, Delhivery, Narayana Hrudayalaya, Computer Age Management Services, Kirloskar Brothers, IDFC, Eris Lifesciences, Zydus Wellness, and Ion Exchange (India) are set to release their Q1 results today.
Sapphire Foods:
Sapphire Foods’ Q1 performance was largely in line with estimates. Consolidated revenue and EBITDA grew by 9.8% and 1.5%, respectively, but PAT fell by 67.1%. Despite a 23% increase in stores, KFC revenue grew by 11%, while same-store sales growth (SSSG) fell by 6%. Pizza Hut (PH) saw a revenue increase of 2.6% with a 7% decline in SSSG. Sri Lanka’s revenues and SSSG grew by 19% and 11%, respectively, due to stable macroeconomic conditions. Sapphire Foods added 13 KFC and 1 Pizza Hut store, bringing the total to 886. The company plans to focus on revitalizing PH store metrics, though store expansion will slow in FY25. Gross margins improved slightly to 68.6%, but higher employee costs and other expenses led to a decline in EBITDA margins to 17.3%. Management aims to boost brands and SSSG through various initiatives, including expanding the KFC portfolio, enhancing marketing, and calibrating store expansion. Centrum Broking has downgraded the stock to “REDUCE” with a revised target price of Rs 1,630, based on a DCF valuation and an EV/EBITDA multiple of 13.1x FY26E EPS.
Relaxo Footwear:
Relaxo Footwear’s Q1FY25 results were in line with expectations, showing a 1.3% increase in revenue. However, EBITDA and PAT declined by 8.1% and 21.3% YoY, respectively. The challenging macro environment and intense heatwave in the north led to subdued demand, with a 2% drop in volume (50 million pairs). Realizations improved by 3.4% due to a better product mix. Persistent food inflation and rising local competition impacted growth. Despite this, the company’s strategic initiatives, such as price adjustments and improved affordability, are expected to boost volumes. Gross margins increased to 62.0%, but higher staff and other expenses led to a reduction in EBITDA margin to 13.2%. PAT declined by 21.3% due to lower other income. Centrum Broking maintains an “ADD” rating with a target price of Rs 950, reflecting a 65x FY26E EPS valuation.
