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On Tuesday, Macquarie began coverage of Sapphire Foods India Ltd, the operator of KFC and Pizza Hut outlets in the Indian subcontinent, with an Outperform rating and a price target set at INR 390.00. The research firm's endorsement comes on the heels of Sapphire Foods' successful revamp of Pizza Hut operations in Sri Lanka, which Macquarie believes showcases the company's capability to enhance Pizza Hut's performance in India as well.
Sapphire Foods' strategic direction has been noted for its potential to turn around Pizza Hut India's fortunes, while the company's KFC business model remains robust. However, Macquarie anticipates a slower pace of new KFC store openings compared to its competitor, Devyani International (NS:DEVY), due to a longer period required for chicken products to gain traction in Sapphire's KFC markets.
The price target proposed by Macquarie reflects an expectation of Sapphire Foods' market performance aligning closely with its historical average. The firm's outlook is based on the company's potential for growth and improvement in its operations, particularly in the Pizza Hut brand within India.
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