The Board of Sapphire Foods India Limited approved a revised scheme of arrangement for its amalgamation with Devyani International Limited on August 26, 2026. The revision follows the termination of a secondary share sale transaction involving promoter Sapphire Foods Mauritius Limited (SFML).

The Board removed the consummation of the secondary sale as a condition precedent to the effectiveness of the merger scheme. Consequently, SFML will receive shares of Devyani International in accordance with the original exchange ratio, similar to other shareholders.

Revised Scheme Terms

The merger framework agreement was amended and restated to reflect the termination of the share purchase agreement between SFML and Arctic International Private Limited. The parties terminated the agreement by mutual consent following commercial discussions.

SFML and Arctic may continue exploring a secondary transaction at a later date, subject to compliance with applicable laws. This potential future transaction does not impact the current merger terms.

What the Numbers Show

The share exchange ratio remains fixed at 177:100, indicating that the termination of the promoter’s exit plan did not alter the valuation basis agreed upon in January 2026. The removal of the condition precedent simplifies the regulatory approval path, as the merger no longer depends on a separate third-party transaction closing first.

The merger process continues in the ordinary course, subject to requisite approvals from regulators and shareholders. The change has no impact on the shareholders of either entity other than the procedural adjustment to the scheme conditions.

Sapphire Foods India Limited reported robust financial performance for the first quarter of FY27, with restaurant sales rising 15% year-on-year to ₹8,882 Mn. The company’s EBITDA surged 24% to ₹1,406 Mn, while EBITDA margins expanded by 120 basis points to 15.8%, signaling improved operational efficiency and cost management. This growth trajectory is significant for investors as it demonstrates resilience in the quick service restaurant (QSR) sector despite broader economic headwinds.

The filing was submitted pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 on August 11, 2026. The corporate presentation highlights that the company operates 1,074 restaurants across India, Sri Lanka, and Maldives as of June 30, 2026. Key strategic initiatives include zero-based cost budgeting and the PACE SETTER program for benchmarking costs among restaurants.

Financial Performance Overview

The financial results for Q1FY27 reflect a strong recovery in profitability metrics compared to the previous year. Adjusted EBITDA, before Ind-AS 116 adjustments, increased by 37% to ₹749 Mn, with adjusted EBITDA margins improving by 130 bps to 8.4%. Profit Before Tax (PBT), before exceptional items, saw a substantial 229% year-on-year jump to ₹273 Mn.

Segmental Analysis

KFC India remained the primary growth driver, contributing significantly to the overall revenue surge. KFC’s restaurant-related revenue grew 17% year-on-year to ₹6,183 Mn, with EBITDA margins expanding by 120 bps to 16.9%. The brand added 16 net restaurants during the quarter, bringing its total count to 591. In contrast, Pizza Hut India faced challenges, with revenue growing only 3% to ₹1,360 Mn and EBITDA margins contracting by 110 bps to -3.6%. However, average daily sales per restaurant for Pizza Hut improved slightly to ₹44,000 from ₹41,000 in the prior year period.

Sri Lanka operations also showed positive momentum, with revenue increasing 16% in INR terms to ₹1,349 Mn. The segment added one net restaurant, reaching a total of 137 outlets.

What the Numbers Show

A key analytical observation is the divergence between top-line growth and margin expansion. While restaurant sales grew by 15%, EBITDA grew at a faster pace of 24%. This suggests that Sapphire Foods is successfully leveraging its scale and implementing cost-control measures such as zero-based budgeting. The gross margin improved by 140 bps to 69.0% in Q1FY27, further supporting the view that operational efficiencies are translating into bottom-line gains. Additionally, the shift towards smaller, omni-channel restaurants is evident, with delivery constituting 43% of the omnichannel mix, up from 21% in FY19.