Devyani International Ltd. share price target

We have rolled forward our valuation basis to Sept’27 estimates. We value Devyani at 19.0x Sept’27 EBITDA, implying a target price of INR 165.

Devyani International’s (DEVYANI) consolidated revenue grew 13% YoY in 2QFY26. The India revenue was up 12% YoY, led by the Skygate acquisition and 16% YoY store expansion.

We have revised our FY26E/FY27E EBITDA estimates by -9.3%/-3.3%, as we factor in more gradual pick-up in consumer demand and higher input costs in FY26, led by online marketing projects undertaken by the Company.

We upgrade Devyani to BUY from Add, while raising our TP by ~18% to Rs200 from Rs170 (30x FY27E EBITDA vs 26x earlier). The upgrade is led by potential value creation in the likely acquisition of ‘Biryani By Kilo’ (BBK) and possible return of a mid-teen growth for the India business in FY26E (vs 7% in FY25).

Devyani International’s (DEVYANI) consol. revenue grew 54% YoY (in line) in 3QFY25, led by a recent acquisition in Thailand. India revenue was up 10% YoY, despite 20% YoY store expansion, which was offset by weak samestore sales growth (SSSG) across brands.

We met with Mr. Manish Dawar, CFO of Devyani International (DIL), to discuss the current demand trends, the company’s growth outlook across business verticals, and its long-term strategy.

Devyani International Limited (DIL) posted another quarter of muted performance in Q2FY2025, with KFC’s and Pizza Hut’s SSSG declining by 7% and 5.7%, respectively. Revenue growth of 49% y-o-y was mainly led by the integration of Thailand’s KFC business.

DIL’s Q2 EBITDA was ~13% below our estimate, on margin miss in KFC and higher HO costs.

Devyani International Ltd’s (DEVYANI) consol. revenue grew 49% YoY (est. +42%), including the recent acquisition in Thailand.

DIL's Q4 EBITDA was 7-8% higher vs. our estimates, largely helped by strong
cost optimization as topline was weaker. Given a glut of weak consumption
trends, with 7/14% SSG decline in KFC/PH, a flat margin is commendable (vs.
250bps QoQ margin decline for Sapphire PH/KFC).

Devyani International (Devyani) reported 38.7% YoY revenue growth in
4QFY24, including the Thailand acquisition. The organic growth (exacquisition) is expected to be ~5% YoY (est. 7.5%) despite a 20% store growth.

DEVYANI delivered a strong performance in 3QFY22, with an improvement on all operating metrics. Both KFC and Pizza Hut (PH) saw a sequential improvement in ADS to INR124k and INR47k, respectively, despite the addition of a large number of stores in the past five quarters. While strong demand tailwinds in 3QFY22 boosted KFC's ADS, the same may normalize going forward. However, the gradual uptick in ADS for PH is likely to continue on account of the brand's focus on the delivery channel. The company delivered a pre-Ind AS EBITDA of 16.4% in 3QFY22 (up 430bp...

Growth through expansion

Devyani International Ltd. (DIL) is an associate company of RJ Corp, the largest bottling partner of food and beverages (F&B;) major Pepsico, and has interests in the Indian retail F&B; sector. It is the largest franchisee of Yum Brands, operating core brands such as Pizza Hut, KFC, Costa Coffee besides its own brands such as Vaango, Food Street, Masala...