Sapphire Foods India Ltd shares surged sharply on Wednesday, even as the company reported a wider consolidated net loss for the March quarter (Q4 FY26).

The company posted a net loss of Rs 12.61 crore in Q4 FY26, compared with a loss of Rs 4.79 crore in the previous quarter. The widening loss was largely due to one-time charges, including Rs 6.22 crore linked to new labour codes and Rs 6.56 crore related to the merger.

However, revenue from operations rose 11.4 per cent year-on-year (YoY) to Rs 792 crore. Sapphire Foods, following its merger with Devyani International in January, now operates more than 3,000 KFC and Pizza Hut outlets globally, competing with market leader Jubilant FoodWorks.

What the company said

Commenting on the quarterly performance, the company said, "Q4 FY26 is our best quarter in the last 12 quarters in terms of SSSG and adjusted EBITDA growth, driven by strong new consumer recruitment by KFC. This is despite LPG-related availability and inflationary challenges. This uplift in performance is encouraging as we move into the new fiscal."

Brokerage view: Target price

Elara Capital, in its latest report, said Sapphire Foods reported 4 per cent same-store sales growth (SSSG) in Q4, with KFC remaining the key driver, supported by resilient dine-in and takeaway demand and a stabilised delivery mix of around 43 per cent.

"Global quick service restaurant (QSR) chains like KFC are better positioned to gain market share over standalone players amid LPG disruption and inflationary pressures, given competitive value meal pricing. We expect KFC SSSG of 5–6 per cent in FY27E, supported by a low base. However, Pizza Hut SSSG decline and weak international profitability continue to weigh on consolidated earnings," the domestic brokerage stated.

Elara added that synergistic benefits from the Devyani International merger and operating leverage are expected to drive a 232 basis points (bps) margin expansion to 2.1 per cent over the next two years.

The brokerage has assigned a target price of Rs 260 and maintained a 'Buy' rating.

"We retain Buy with a lower target price of Rs 260. KFC trades at 25x FY28E EV/EBITDA, and re-rating is contingent on sustained SSSG and margin delivery," it said.

Elara also assigned a 'Buy' on Devyani International, with a target price of Rs 165.

Stock performance

Shares of Sapphire Foods surged 19.59 per cent to close at Rs 209.05. Meanwhile, Devyani International gained 13.77 per cent to settle at Rs 127.53.