Latest news with #DevanshuBansal
Mint
23-04-2025
- Business
- Mint
Devyani's growth recipe: Is Biryani by Kilo adding grams or a kilo-load of value?
India's beloved biryani, king of online food orders, feeds the nation's soul. Soon, it might offer comfort beyond the plate. As investors crave domestic growth to navigate global turbulence, they are assessing whether this culinary champion can become the likely flavour of choice to counter global market jitters. At a time when the US tariff tantrums keep global markets on the edge, experts are hopeful of a pickup in Devyani International Ltd's (DIL) business as it plans to add biryani to its menu. The quick-service restaurant (QSR) operator is in talks to acquire Sky Gate Hospitality (SGH), which operates the brand Biryani By Kilo (BBK). Read more: Food delivery growth likely to remain flat sequentially in Q4 Given BBK's rising popularity, experts noted that this move might be a smart bet for DIL, especially as it struggles with falling sales in its KFC and Pizza Hut outlets across India. DIL, the largest franchisee of KFC and Pizza Hut in India, continues to battle a stubborn urban demand slowdown, which has led to a continuous decline in its same-store sales growth (SSG) for almost eight quarters now. Same-store sales measure comparable sales in existing stores over a period of time and are a key metric to gauge consumer appetite for fast food. 'With retail inflation hitting a six-year low in March and effects of the income tax cut starting to play out from April, urban consumption is likely to bounce back in FY26. Since QSR is a small-ticket segment, we might see a pickup in demand here first," pointed out Devanshu Bansal, research analyst at Emkay Global. Bansal expects DIL's SSG metrics for KFC and Pizza Hut to bottom out in the March quarter (Q4FY25), creating a favourable base for a mid-teen organic earnings growth in FY26. Hence, experts noted that DIL might be a strong candidate for playing the domestic consumption theme in the medium term, especially when people are shunning tariff-exposed sectors. They pointed out that the recent bouts of market correction have also brought the stock's price to attractive levels. DIL's biryani move further strengthens this investment thesis, according to some. This is because BBK's curated menu of Hyderabadi, Lucknowi, and Kolkata biryanis, along with kebabs and curries, caters to a broader palette, and they have adopted a decentralized model wherein each biryani order is cooked separately at the outlet, ensuring superior food quality. This has helped BBK generate a loyal customer base and deliver much better average daily sales (ADS) than peers like Behrouz Biryani and Biryani Blues, noted a recent Kotak Institutional Equities report. Currently, BBK sees average daily sales worth ₹ 60,000, contributing to about 75% of SGH's total average daily sales. Read more: On a platter: Rebel Foods gets $25 mn from Qatar Investment Authority for restaurant expansion Moreover, Devyani is already about to launch three new QSR brands in India this month—Tealive, New York Fries and Sanook Kitchen—to cater to shifting consumer tastes for trending items like bubble tea and pan-Asian cuisines. Entering the biryani market through an established business will further ensure steady ADS numbers for the company, experts said. Kotak Institutional Equities further believes BBK has enough structural levers to achieve meaningful scale in the medium term. Devyani's larger pan-India presence will further widen its customer base. Under DIL, the brokerage expects BBK's profitability to improve, which is currently loss-making. This would be led by cost synergies between the two companies, where BBK's corporate overhead and raw material sourcing costs are expected to come down post-acquisition. Further, 'we expect (BBK's) store additions to pick up pace through new standalone restaurants, stores at food courts operated by Devyani at malls, airports, highways and overseas expansion in the medium term," the report added. However, not everyone is convinced. Sachin B. Bobade, analyst at Dolat Capital Market, noted that India's ₹ 20,000-25,000 crore biryani market is extremely fragmented, where consumer taste is highly localised and sensitive. Hence, he said a broad-based pan-India approach might not work out for DIL. 'Jubilant (FoodWorks) tried entering the biryani market in the past, but it failed, because customers tend to stick to local players for biryani, who offer (the product) at much lower price points. They now deliver through online platforms as well. So, the competition is intense," Bobade noted. 'Moreover, biryani is a relatively small-ticket item, and corporates like DIL have high overhead costs. Hence, adding biryani to the roster might not improve their profitability either," he added. Read more: Sow wisely: India can reap a lot more from its agricultural sector
Time of India
22-04-2025
- Business
- Time of India
KFC-operator Devyani International to buy Biryani by Kilo, shares jump 4%
Shares of QSR operator Devyani International , which runs outlets of brands like KFC , Pizza Hut and Costa Coffee, rallied up to 4 per cent to Rs 172.65 on BSE on announcing plans to acquire Biryani by Kilo . Following the announcement that Devyani will hold a board meeting on April 24 to consider and approve definitive agreements and issuance of equity shares on a preferential basis to for acquisition of controlling equity stake in Sky Gate Hospitality , operating restaurants under the brand 'Biryani by Kilo, and other brands, Emkay Global upgraded the stock to buy and raised target price to Rs 200. "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 per cent in FY25). Commencing operations in FY16 in Delhi-NCR, BBK has now scaled up to ~100 stores in 45 cities, and seen revenue CAGR of 55 per cent (FY19-24) to ~Rs3bn. The biryani market is a large but highly unorganized one which offers scope for continued growth," Emkay's Devanshu Bansal said. In addition to its topline, Devyani's operational excellence, synergies, and the RJ Corp Group's ability to conclude acquisitions at attractive valuations make a case for strong value creation. Kotak Equities analysts said Sky Gate Hospitality has revenues of about Rs 300 crore (FY2025) from 106 restaurants (of which 65-70 are cloud kitchens) across 40+ cities. "We estimate the acquisition valuation to be at 2-2.5X EV/sales and funded via equity issuance by Devyani. We like DIL's foray into biryani—a large, delivery-friendly F&B category that offers an opportunity to scale a QSR biryani brand, notwithstanding local competition and regional taste preferences," the brokerage firm said, reiterating buy call with a target price of Rs 190. Besides Biryani By Kilo (BBK), Sky Gate also runs a few other brands like Goila Butter Chicken, The Bhojan and Get-A-Way. "We like this acquisition as (1) biryani is a Rs 200-250 bn category, which is highly fragmented and delivery-friendly (the most popular dish on delivery platforms, with Zomato/ Swiggy delivering 91/83 mn biryani orders in 2024), (2) BBK has fared well among biryani QSRs and has superior ADS, (3) SG founders would continue to run this business for the foreseeable future," Kotak said.
Time of India
21-04-2025
- Business
- Time of India
KFC-operator Devyani International to buy Biryani by Kilo, shares jump 4%
Shares of QSR operator Devyani International , which runs outlets of brands like KFC , Pizza Hut and Costa Coffee, rallied up to 4% to Rs 172.65 on BSE on announcing plans to acquire Biryani by Kilo . Following the announcement that Devyani will hold a board meeting on April 24 to consider and approve definitive agreements and issuance of equity shares on a preferential basis to for acquisition of controlling equity stake in Sky Gate Hospitality , operating restaurants under the brand 'Biryani by Kilo, and other brands, Emkay Global upgraded the stock to buy and raised target price to Rs 200. "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). Commencing operations in FY16 in Delhi-NCR, BBK has now scaled up to ~100 stores in 45 cities, and seen revenue CAGR of 55% (FY19-24) to ~Rs3bn. The biryani market is a large but highly unorganized one which offers scope for continued growth," Emkay's Devanshu Bansal said. In addition to its topline, Devyani's operational excellence, synergies, and the RJ Corp Group's ability to conclude acquisitions at attractive valuations make a case for strong value creation. Kotak Equities analysts said Sky Gate Hospitality has revenues of about Rs 300 crore (FY2025) from 106 restaurants (of which 65-70 are cloud kitchens) across 40+ cities. "We estimate the acquisition valuation to be at 2-2.5X EV/sales and funded via equity issuance by Devyani. We like DIL's foray into biryani—a large, delivery-friendly F&B category that offers an opportunity to scale a QSR biryani brand, notwithstanding local competition and regional taste preferences," the brokerage firm said, reiterating buy call with a target price of Rs 190. Besides Biryani By Kilo (BBK), Sky Gate also runs a few other brands like Goila Butter Chicken, The Bhojan and Get-A-Way. "We like this acquisition as (1) biryani is a Rs200-250 bn category, which is highly fragmented and delivery-friendly (the most popular dish on delivery platforms, with Zomato/Swiggy delivering 91/83 mn biryani orders in 2024), (2) BBK has fared well among biryani QSRs and has superior ADS, (3) SG founders would continue to run this business for the foreseeable future," Kotak said.
