1:5 Stock Split: Record Date To Be Decided Soon; What Should Be Your Trade Call?

One of the largest restaurant chains in the Indian subcontinent is Sapphire Foods. Sapphire Foods, having successfully operated KFC, Pizza Hut, and Taco Bell stores throughout India, Sri Lanka, and the Maldives, is one of Yum! Brands Inc.'s major franchisees in the subcontinent. Apart from managing and operating restaurants under the KFC and Pizza Hut names and fonts, Sapphire Foods India Limited is not involved in any other type of business. By March 31, 2024, it owned and operated 2 KFC and 319 Pizza Hut stores in the Maldives, 111 Pizza Hut and 9 Taco Bell stores in Sri Lanka, and 429 KFC and 319 Pizza Hut outlets in India.

Sapphire Foods Stock Split

The Board of Directors considered and approved, "Alteration in the share capital of the Company by sub-division/split of existing equity shares of the Company from 1 (One) equity share having face value of Rs. 10/- (Rupees Ten) each fully paid up, into 5 (Five) equity shares having face value of Rs. 2/- (Rupees Two) each fully paid-up, subject to the approval of shareholders at the forthcoming 15th Annual General Meeting of the Company," said the company in a regulatory filing on Wednesday, 19th June 2024.

"The date of 15th Annual General Meeting of the Company and Record Date for the purpose of subdivision/split of existing equity shares of the Company, will be intimated in due course and at an opportune time," Sapphire Foods further informed stock exchanges.

"In order to improve liquidity of the equity shares of the company in the capital markets through widening shareholder base and to make it more affordable for retail investors," is the rationale behind the stock split action according to the company.

Sapphire Foods Q4 Performance Update

Consolidated net profit for the firm fell 98.2% to Rs 2.39 crore in Q4 FY24 from Rs 135.59 crore in Q4 FY23. For the quarter ended March 31, 2024, revenue from operations climbed 12.7% YoY to Rs 631.70 crore. In comparison to the Rs 103.04 crore reported in Q4 FY23, EBITDA went up by 7% to Rs 110.23 crore in Q4 FY24. In Q4 FY24, EBITDA margin dropped to 17.5% from 18.4% in the same period of FY23.

Sapphire Foods Share Price Target

KKunal V Parar - VP of Technical Research and Algo at Choice Broking said, "On the daily chart, the stock has formed a Shooting Star candlestick formation, indicating a potential bearish reversal and suggesting downside momentum in the counter. Furthermore, the stock has encountered strong resistance at its previous peak, reinforcing the possibility of weakness in its current trend. Despite these factors, the stock has maintained trading above its 50-day moving average, signalling a positive outlook for the medium term."

"The daily RSI momentum indicator has recently entered into its overbought zone, implying some caution as it suggests a potential for a negative turn in the stock's momentum. Considering the above technical analysis, we anticipate a downside move towards the levels of 1,500 to 1,460. On the upside, the stock faces resistance around the 1,670 level. It's important to note that this expected downside move is relevant for the short-term perspective only, as the stock's position above its 50-day moving average indicates a continuing upward trend for the medium term," the analyst recommended.

Disclaimer

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