Should Sapphire foods stock hold or sell after listing

 

Sapphire foods stock analysis:

Confusion must be coming in the mind of all the investors and traders about sapphire foods stock should be held and sold. If we talk about the subscription of Sapphire Foods IPO, then the response was mixed. Retail portion of Sapphire foods IPO was 8.7 times, QIB portion of issue was subscribed by 7.5 times & NII portion was subscribed 3.7 times.  As per the company, there will not be any hold on the money raised from this public issue. Whole amount of the money will go to selling shareholders including promoters and investors but excluding issue expenses. If we will compare the data then we will find then  Westlife Development is trading around 8.5 multiple from marketcap to sale ratio & Devyani international is trading at 15 multiple but sapphire foods is coming up with nearly 13 multiple.  After analysis the IPO subscription data, we may say that there is nothing left on the table for traders & investors after the sapphire foods IPO listing. We will discuss in detail that should Long term investors hold Sapphire foods stock? Should traders book profit on IPO listing or hold? Let us try to understand first what company does and what are the company future plans, financial performances & sapphire foods competitors in the market.

Business Model of Sapphire Foods Company & Its competitors in the market:

The name of Sapphire Foods is also famous in the business of restaurant chains. If we talk about the Indian stock market, then some companies are already listed in this segment, whose business model is almost similar. In Indian Stock Market Devyani International Ltd stock is already listed in Indian Stock Market which has similar business model. There is a difference between Sapphire Foods and Devyani International Company that is the size difference of the company. Devyani International is approximately 12% larger in size than Sapphire Foods by 16%. Sapphire Foods is in the business of Quick Service Restaurant Services. Sapphire Foods has over 250 KFC and Pizza Hut Stores in India and Sri Lanka. As we know that famous brands like KFS, Pizza Hut, are doing good business in India. The inclination of today's youngsters has also increased towards more branded restaurants. But Almost Same Brands is also owned by the franchises of Devyani International Ltd. But the major difference is that Sapphire Foods Company out Of India is also doing business like Sri Lanka, Maldives states.

Negative points of the Sapphire foods company:

The biggest negative point that we have calculated is that in August 2021, Sapphire Company recently issued equity shares at a price of 506rs per share to some big investors like edelweiss funds & to sapphire foods Mauritius based company. There is no question on that why company sold then stocks at lower levels but problem is that the same Investors (Edelweiss and its subsidiary company) both are selling their share in the IPO by Offer for sale at higher price band of IPO.

Retail investors and Indian stock market probably did not like this thing and Sapphire Foods IPO did not get good response. It is also true that if the company is issuing shares of the company to the first few investors three months at the price of 506rs, then why is the IPO of Sapphire Foods at double the IPO price? This can prove to be a huge negative point at the listing time of IPO.

So far Sapphire Foods has not even come in net profit. Another negative point is that the company has not paid ESI, profession tax and PF for 3 years till now. As per our view it is big negative point for the company. Let us see how Indian stock market traders and investors take it after IPO listing. Otherwise fundamentals of the company are not bad.

 Positive points of sapphire foods company & financial performance of sapphire foods:

The brand positioning of the company is also good and the track record of the promoters is also good. If we check the track record of the company for the last 3 to 4 years, then Sapphire Foods Company is also recording good growth and is opening new stores. About 300 crore to 400 crore cash is lying on the books of Sapphire Foods. After bringing the IPO in the Indian market, the company will have around 2500 crore cash that will help in the expansion plans of the company. Company has recorded profit at operational level but net profit yet to come. It means at the operations front sapphire foods is doing good.

Also read: Sigachi industries stock hold or sell after listing

Sapphire foods hold or sell:

If we will compare the share price of Devyani International stock price is running 160rs and Sapphire Foods IPO price was kept at 1120rs to 1180rs which seemed a bit expensive but still looking at Sapphire Foods Company's business growth and global presence of the company we can say that company has good growth story.  One may expect 4% to 6 % IPO listing gains maximum. Valuations are very high but there is nothing bad with the company business model. Company business is in demand and 400cr cash on company books also attract the long term investors. If any investor has long term point of view at least 1 to 2 years then it is better to hold sapphire foods stock after IPO listing with the stoploss of 1080rs on closing basis. If due to any reason Sapphire foods stock opens somewhere around IPO price or flat to slightly positive or negative opening then long term investors should wait to take new entry into the stock. If by any inside reasons stock of sapphire foods open vat very higher levels then it will be best strategy to book some profit and add on lower levels. Traders should raise stop losses too

Should you but Sapphire foods Stock?

As we have already disused that at this point of time we should not expect bumper listing of this IPO but if any investor has 1 to 2 years investment time horizon then you can start accumulate sapphire foods stock even after IPO listing. Long term Price targets of Sapphire foods stocks, If Sapphire foods stock will be able to sustain its listing gains and does not give closing below 1080rs (+/-) then Long term investors should not worry. In this case long term price targets will be 1480rs to 1520rs+ in the coming months.

Must Note: the only big negative points comes into our mind which we have discussed above regarding issuing of Equity shares of the company  to few investors at half price of IPO price band. Otherwise, nothing is much bad with the company long term investors can accumulate this stock on lower levels. Traders should keep strict stoploss as discussed above.