Why Pizza Hut, KFC operator, Sapphire Foods, share fell 5% in trade today?

The GST order is for a demand of Rs 81.45 lakh, including interest of Rs 35.68 lakh and a penalty of Rs 4.16 lakh

Sapphire Foods, which operates KFC and Pizza Hut, shares lost 5 per cent in Wednesday's trade on BSE, logging an intraday low at Rs 336.05 per share. The stock dropped after the company received a demand notice from goods and services tax (GST) authorities from Karnataka.

 

At close, Sapphire Foods' share price was down 3.98 per cent at Rs 340 per share on BSE. In comparison, the BSE Sensex was down 0.06 per cent at 78,148.49. The market capitalisation of the company stood at Rs 10,902.92 crore. The 52-week high of the stock stood at Rs 400.5 per share and the 52-week low of the stock stood at Rs 259.2 per share.

 

"This is to inform you that the company has received a Demand order from Deputy Commissioner of Commercial Taxes, (Audit)-4.1, DGSTO-4, Bengaluru, Karnataka," the filing read. 

 

The order is for a demand of Rs 81.45 lakh, including interest of Rs 35.68 lakh and a penalty of Rs 4.16 lakh. GST Authorities from Karnataka have disallowed utilisation of eligible input tax credits against the output tax liability of CGST and SGST.

 

Further, the company is in the process of evaluating the order and shall take necessary steps to respond to the demand order including challenging the said order at relevant appellate forums.

 

Besides, the company on January 7, 2025, closed two operational stores, 1 KFC and 1 Pizza Hut, of Gamma Island Food Private Limited, a subsidiary of the company, situated in the Maldives. 

 

The closure was a consequence of continuous operational losses incurred by stores in Maldives, it was found prudent to close the stores operated by Gamma Maldives.

 

Sapphire Foods India Ltd. operates popular quick-service restaurant (QSR) brands like KFC and Pizza Hut in India and Sri Lanka under franchise agreements. The company has built a large network of outlets, including standalone stores and delivery-focused formats, and continues to expand its presence in both urban and emerging markets. The company has built a large network of quick-service restaurants, including standalone stores, express counters, and delivery-focused formats. They focus on offering a variety of menu options while maintaining the standards and taste of international brands.

 

In the past one year, Sapphire Foods shares have gained 26.6 per cent against Sensex's rise of 9.5 per cent.