Latest news with #Devyani
Indian Express
3 days ago
- Business
- Indian Express
Too many brands, too little growth? A deep look at Devyani International
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. The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.
Time of India
10-05-2025
- Business
- Time of India
Franchisee ad row hurting sales: Sapphire CEO
Differences between two of global restaurant chain Pizza Hut 's biggest franchisees in India -Sapphire Foods and Devyani International-have led to pausing of advertising in common franchisee zones, impacting sales, a top executive said. "Starting January-March '25 quarter, we have not been able to invest in mass media advertising (for Pizza Hut)... That's resulted in an impact on our transactions," Sanjay Purohit, group chief executive of Sapphire Foods , said in a post-quarter earnings call. "That's arising because of a difference of view between us and our sister franchisee (Devyani) on marketing strategy and investments on advertising." While Ravi Jaipuria-owned Devyani is the largest franchise partner of Yum! Brands-which owns quick-service restaurant (QSR) chains including KFC, Pizza Hut and Taco Bell-with rights to operate these brands in North and East India, Sapphire operates the brands in South and West India. Devyani operates an overall 2,000-plus stores, while Sapphire's total store count is over 900. "While Yum is aligned with investing (on Pizza Hut ads) similar to us, the difference in opinion has meant that we've not been able to advertise in common markets," Purohit told analysts. When contacted by ET, Jaipuria declined to comment. Devyani International 's January-March quarter earnings are scheduled for later in this month. Store operations of both franchisees overlap in markets such as Maharashtra, Andhra Pradesh and Karnataka, with stores across delivery-only, takeaways and airports. Purohit's comments come amid continued slowing sales of QSRs. Reacting to an analyst query on when Sapphire Foods expected a resolution to the differences, Purohit said it may take one-two quarters. "The difference of opinion really stems from our belief whether spending on or investing behind mass media advertising is resulting in increased transactions or not... If there are questions in someone else's mind on that, that's perfectly alright... The only way to do that is through data and through actually proving that this can work," he said.
Time of India
09-05-2025
- Business
- Time of India
Franchisee ad row hurting sales: Sapphire CEO
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel Differences between two of global restaurant chain Pizza Hut 's biggest franchisees in India -Sapphire Foods and Devyani International-have led to pausing of advertising in common franchisee zones, impacting sales, a top executive said."Starting January-March '25 quarter, we have not been able to invest in mass media advertising (for Pizza Hut)... That's resulted in an impact on our transactions," Sanjay Purohit, group chief executive of Sapphire Foods , said in a post-quarter earnings call. "That's arising because of a difference of view between us and our sister franchisee (Devyani) on marketing strategy and investments on advertising."While Ravi Jaipuria-owned Devyani is the largest franchise partner of Yum! Brands-which owns quick-service restaurant (QSR) chains including KFC, Pizza Hut and Taco Bell-with rights to operate these brands in North and East India, Sapphire operates the brands in South and West India. Devyani operates an overall 2,000-plus stores, while Sapphire's total store count is over 900."While Yum is aligned with investing (on Pizza Hut ads) similar to us, the difference in opinion has meant that we've not been able to advertise in common markets," Purohit told contacted by ET, Jaipuria declined to comment. Devyani International 's January-March quarter earnings are scheduled for later in this operations of both franchisees overlap in markets such as Maharashtra, Andhra Pradesh and Karnataka, with stores across delivery-only, takeaways and comments come amid continued slowing sales of to an analyst query on when Sapphire Foods expected a resolution to the differences, Purohit said it may take one-two quarters."The difference of opinion really stems from our belief whether spending on or investing behind mass media advertising is resulting in increased transactions or not... If there are questions in someone else's mind on that, that's perfectly alright... The only way to do that is through data and through actually proving that this can work," he said.
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.
