Sapphire Foods revenue rises 20 per cent as Q2 slips into loss

MUMBAI: Sapphire Foods has served up a mixed financial platter, with revenue growing nearly 20 per cent year on year in the September quarter even as the restaurant operator slipped back into the red. The company reported a consolidated net loss of Rs 1.51 crore for the quarter ended 30 September 2026, compared with a loss of Rs 12.79 crore in the year-ago period.

Revenue from operations rose to Rs 888.03 crore from Rs 742.44 crore in the corresponding quarter last year, an increase of around 19.6 per cent. However, the latest quarter’s performance was weaker than the preceding three months, when revenue stood at Rs 890.96 crore and the company reported a consolidated profit after tax of Rs 14.02 crore.

Total consolidated income, including other income, reached Rs 894.97 crore in the September quarter, compared with Rs 751.69 crore a year earlier. Expenses, meanwhile, climbed to Rs 895.55 crore from Rs 768.26 crore, leaving the company with a loss of Rs 0.58 crore before exceptional items and tax. After accounting for an exceptional charge of Rs 1.33 crore linked to merger-related expenses, the loss before tax stood at Rs 1.91 crore.

The net loss after tax narrowed significantly from the Rs 12.79 crore recorded in the September quarter of the previous year. The improvement, however, did not translate into a quarterly profit, with costs continuing to weigh on the bottom line.

Among the major expense heads, the cost of materials consumed increased to Rs 281.85 crore from Rs 239.37 crore a year earlier. Employee benefits expense rose to Rs 116.20 crore from Rs 105.75 crore, while finance costs increased to Rs 33.11 crore from Rs 30.67 crore. Depreciation and amortisation stood at Rs 101.33 crore, compared with Rs 97.25 crore in the year-ago quarter.

Other expenses also moved higher, rising to Rs 363.06 crore from Rs 295.23 crore. Together, these costs contributed to the pressure on quarterly profitability, despite the increase in revenue.

The half-year picture, however, offers a brighter contrast. For the six months ended 30 September 2026, consolidated revenue from operations grew to Rs 1,778.99 crore from Rs 1,519.27 crore in the corresponding period last year, an increase of around 17.1 per cent. Total income rose to Rs 1,791.61 crore from Rs 1,535.29 crore.

Sapphire Foods reported a consolidated profit after tax of Rs 12.51 crore for the first half, reversing a loss of Rs 14.53 crore in the same period last year. Profit before tax stood at Rs 14.26 crore, compared with a loss before tax of Rs 18.42 crore a year earlier. The half-year results include the Rs 1.33 crore exceptional charge associated with the proposed arrangement involving Devyani International.

Operating cash flow also strengthened. Net cash generated from operating activities increased to Rs 304.99 crore in the first half of FY27 from Rs 212.24 crore in the corresponding period last year. Cash generated from operations before income tax payments rose to Rs 314.86 crore from Rs 220.94 crore.

The company reported net cash used in investing activities of Rs 180.51 crore during the half year, while net cash used in financing activities stood at Rs 102.25 crore. Cash and cash equivalents at the end of September amounted to Rs 87.73 crore, compared with Rs 50.68 crore a year earlier.

On a standalone basis, revenue from operations increased by around 22 per cent to Rs 751.27 crore in the September quarter from Rs 616.07 crore a year ago. Total income rose to Rs 757.90 crore from Rs 625.10 crore. The company nevertheless reported a standalone net loss of Rs 5.70 crore, narrower than the Rs 17.30 crore loss recorded in the corresponding quarter last year.

Standalone expenses rose to Rs 764.57 crore from Rs 648.49 crore. The business reported a loss before exceptional items and tax of Rs 6.67 crore, compared with a loss of Rs 23.40 crore a year earlier. After the exceptional charge, the loss before tax stood at Rs 8 crore.

For the first half, standalone revenue from operations reached Rs 1,507.34 crore, against Rs 1,276.47 crore in the year-ago period. Net profit stood at Rs 7.17 crore, reversing a loss of Rs 20.71 crore in the first half of the previous financial year.

Alongside the financial results, the company’s proposed merger with Devyani International remains a key development. Sapphire Foods’ board approved a scheme of arrangement on 1 January 2026, under which Sapphire Foods would be amalgamated with and absorbed into Devyani International, subject to the necessary regulatory and statutory approvals. The appointed date specified in the scheme is 1 April 2026.

Under the proposed arrangement, Devyani International would issue 177 fully paid-up equity shares of Rs 1 each for every 100 fully paid-up equity shares of Rs 2 each held by Sapphire Foods shareholders. The scheme was amended by Sapphire Foods’ board on 26 August 2026 following the termination of the share purchase agreement between Sapphire Foods Mauritius, Sapphire Foods’ promoter, and Arctic Private, Devyani International’s promoter.

Sapphire Foods and Devyani International filed a joint application with the Competition Commission of India on 10 September 2026 seeking approval for the proposed combination. The merger remains subject to further regulatory and statutory clearances.

The September-quarter results were reviewed and approved by Sapphire Foods’ board on 22 October 2026, following consideration by the audit committee. Deloitte Haskins & Sells issued limited review reports on the unaudited standalone and consolidated financial results.

For now, Sapphire Foods’ numbers tell two stories: revenue continues to expand and first-half profitability has improved substantially, but the latest quarter still ended in a loss. The proposed merger could reshape the company’s future, although the immediate focus remains on converting higher revenue into more consistent quarterly profits.