Sapphire Foods earnings strengthened in the quarter ended September 30, 2026, with consolidated restaurant sales rising 20% year on year to ₹8,853 million. KFC India led the improvement, but the shares traded lower on October 22 despite what the company described as its best revenue and adjusted EBITDA growth in 16 quarters.

Key Takeaways

  • Adjusted EBITDA increased 39% to ₹624 million, while adjusted profit before tax turned positive.
  • KFC India revenue rose 26%, supported by 14% same-store sales growth and a larger restaurant network.
  • Pizza Hut India remained loss-making at the restaurant EBITDA level, while Sri Lanka margins also weakened.

Table of Contents

Sapphire Foods earnings show a stronger operating quarter

For Q2 FY27, adjusted EBITDA margin expanded by 100 basis points to 7.1%. Consolidated EBITDA, a separate reported measure, rose 21% to ₹1,286 million, with a margin of 14.5%.

Adjusted profit before tax reached ₹120 million, reversing a ₹43 million loss in Q2 FY26. Reported profit before tax nevertheless remained marginally negative at minus ₹6 million.

Sapphire Foods, which operates KFC, Pizza Hut and Taco Bell outlets across India and Sri Lanka, had 1,086 restaurants as of September 30.

KFC leads, while Pizza Hut remains under pressure

KFC India posted its highest revenue growth in 16 quarters at 26%. Same-store sales increased 14%, accompanied by double-digit transaction growth. Its restaurant network expanded to 606 outlets from 529 a year earlier.

Despite raw material and energy cost inflation, KFC India's restaurant EBITDA margin improved by 70 basis points to 14.5%.

Pizza Hut India recorded 7% revenue growth and 5% same-store sales growth, its strongest same-store result in seven quarters. Value offers, including a ₹99 four-course meal and buy-one-get-one deals, supported sales. However, elevated energy costs contributed to a 100-basis-point deterioration in its restaurant EBITDA margin to minus 2.8%.

Sri Lanka margins weaken as shares trade lower

The Sri Lanka business increased revenue by 9% in local currency terms, with same-store sales growth of 5%. Wage and energy inflation pressured profitability, pushing the restaurant EBITDA margin down 290 basis points to 12.5%.

Sapphire Foods shares were down 0.58% at ₹191.85 on the NSE on Thursday afternoon. The source report described the stock as down nearly 35% over the past year and cited a 52-week high of ₹310.50.

Conclusion

KFC's sales growth and margin improvement drove Sapphire Foods' stronger quarter, but negative Pizza Hut profitability and cost pressures in Sri Lanka left the operating recovery uneven.

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