Too many brands, too little growth? A deep look at Devyani International

Indian Express

2 days ago

Last Sunday, I was at a mall in Mumbai around lunchtime. I passed by the KFC outlet and noticed it was not that full. It may have just been a one-off, but for a brand as familiar and widely present as KFC, a quiet store felt unusual.
That small moment raised a bigger question in my mind about what is happening with Devyani International, which operates KFC, Pizza Hut, Costa Coffee, Vaango, and several other food and beverage chains, both in India and overseas. Together, it runs more than 2,000 outlets, making it one of the largest quick-service restaurant players in the country.
After listing in 2021, Devyani grew rapidly. It opened new stores across metros and smaller towns, added new brands, and expanded outside India as well. But lately, its growth has slowed down. Store-level sales are under pressure, customer footfall has dipped, and the stock has stayed flat for months.
At the same time, the company has not stopped investing in expansion. So the key question now is: can Devyani return to strong growth, or is it entering a longer phase of slow recovery?
Let us break it down and understand where the business stands today.
When most people think of Devyani International, they think of KFC or Pizza Hut. But the company manages a much wider portfolio.
As of March 2025, Devyani operates more than 2,000 outlets. These are spread across three main parts of the business:
📌Core Brands: This includes KFC, Pizza Hut, and Costa Coffee. These are run through franchise agreements with Yum! Brands and Coca-Cola.
📌Own Brands: Devyani also operates its own concepts, such as Vaango (focused on South Indian cuisine) and Food Street (multi-cuisine).
📌International Business: Devyani runs over 350 stores in countries like Nepal, Thailand, and Nigeria, where it has been expanding quietly over the years.
Among these, KFC is the main driver of revenue. It accounts for approximately 45% of total sales and operates around 700 stores. Pizza Hut is the second-largest, with approximately 15% of the revenue. Costa Coffee is still small in size but is growing steadily.
In the financial year 2025, Devyani added 235 new stores. Many of these came up in Tier 2 and Tier 3 cities, where the company expects future growth. The belief is that smaller towns will bring in new customers who are trying branded food chains for the first time.
However, while store count is increasing, the performance of existing stores is not improving in the same way. In the last quarter of FY25, same-store sales (SSSG) for KFC declined by 6.1%. For Pizza Hut, there was a marginal increase of 1%.
For the full year, India revenue grew by 7%, but operating profit (EBITDA) fell by 8%. This is because costs have gone up. Food inflation, rent, staff wages, and delivery platform fees have all added pressure.
To manage this situation, Devyani is:
So far, the business is growing in size, but profit margins remain under stress. Devyani is betting on long-term consumption growth, but for now, it is trying to manage rising costs while keeping its store network expansion on track.
What happens next will depend on whether consumers start spending more again and whether the new stores begin to perform better over time.
Devyani International closed FY25 with consolidated revenues of Rs 4,951 crore, EBITDA of Rs 842 crore, and a net loss of Rs 69 crore. This means the company cannot yet be valued using the standard Price-to-Earnings ratio, since it is not profitable at the PAT level.
However, the stock is still richly valued.
Devyani's market capitalisation stands at approximately Rs 21,000 crore (as of June 9, 2025), and based on the latest balance sheet, it carries net debt of about Rs 2,500 crore. This gives it an enterprise value (EV) of roughly Rs 24,000 crore.
That puts the stock at an EV/EBITDA multiple of 28 times based on FY25 EBITDA of Rs 842 crore.
This is among the highest valuations in the quick-service restaurant space, despite the company reporting a net loss, seeing negative same-store sales growth in key segments, and operating at sub-optimal store-level margins.
For such a valuation to sustain, the business must deliver a sharp turnaround, both in profitability and efficiency. The management has outlined plans for margin recovery and cost control, but the results are yet to play out fully.
In short, Devyani is priced for a recovery that is still in motion. Unless that recovery is faster and stronger than expected, investors may find limited near-term upside from these levels. The next few quarters will be crucial in showing whether the growth story is on solid footing or just running ahead of itself.
That quiet KFC outlet I saw in Mumbai may have just been one store on one day. But it pointed to something real that even big brands are not immune to when the broader spending environment is tight.
Devyani International is still building, still expanding, and still betting on India's love for quick, branded food. But it is now at a stage where more stores alone will not be enough. What matters next is how efficiently those stores perform, how margins are protected, and how the company adapts to a changing consumer mood.
For investors, it is a story to track with patience. Watch the numbers, see how the margins move, and decide whether the brand engine can fire up again.
Note: This article relies on data from annual and industry reports. We have used our assumptions for forecasting.
Parth Parikh has over a decade of experience in finance and research and currently heads the growth and content vertical at Finsire. He has an MBA in Finance from Narsee Monjee Institute of Management Studies.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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