DEVYANI - Devyani Intl.

📊 NSE: DEVYANI 🏢 Hotels 📅 Last Updated: 12/13/2025 21:29

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue grew 39.2% YoY to INR 4,951.1 Cr in FY 2024-25. In Q2 FY26, Indian operations (including Sky Gate) grew 12.1% YoY to INR 937 Cr, while the International business grew 14% YoY to INR 450 Cr. Own brands (Vaango, Biryani By Kilo, Goila) recorded INR 86 Cr in revenue.

Geographic Revenue Split

India remains the primary market contributing approximately 68% of Q2 FY26 revenue (INR 937 Cr), while International markets (Thailand, Nigeria, Nepal) contribute approximately 32% (INR 450 Cr).

Profitability Margins

Gross margins stood at 67.8% in Q2 FY26, a decline from 69.7% in the previous year primarily due to the consolidation of the Sky Gate portfolio. Net Profit Margin improved to 0.71% in FY 2024-25 from -0.20% in the previous year due to lower expenses and provisions.

EBITDA Margin

Reported EBITDA margin was 14.1% in Q2 FY26 (INR 194 Cr). On a pre-IND AS basis, consolidated operating EBITDA margin was 6.8% (INR 93 Cr), down from 8.1% in the previous quarter due to the full impact of Sky Gate consolidation and start-up costs for new brands.

Capital Expenditure

The company is engaged in aggressive expansion, opening 257 new stores in FY 2024-25 and reaching a total of 2,184 stores by September 2025. While specific total INR Cr capex for the next year is not disclosed, the focus remains on Tier II and Tier III city penetration.

Credit Rating & Borrowing

Interest Coverage Ratio declined 35% to 1.12x in FY 2024-25. Finance costs increased 41.7% YoY to INR 264.8 Cr due to the full-year impact of term loans availed in FY 2023-24.

⚙️ Operational Drivers

Raw Materials

Food and beverage ingredients represent 98.31% of the business activity. Specific inputs include poultry for KFC, dairy and flour for Pizza Hut, and specialized ingredients like Chana for the new 'Chana Burger'.

Import Sources

Sourced across 32 States and Union Territories in India and 3 international locations (Thailand, Nigeria, Nepal).

Capacity Expansion

Current store count is 2,184 as of September 2025, including 1,100 KFC stores and 630 Pizza Hut stores. The company added 257 stores in FY 2024-25 and continues testing new brands like Tealive (6 outlets).

Raw Material Costs

Gross profit was INR 3,412.2 Cr in FY 2024-25 (68.9% of revenue). Gross margins in India declined 1.9% YoY to 69.7% in Q2 FY26 due to input cost changes and the consolidation of lower-margin portfolios like Sky Gate.

Manufacturing Efficiency

Efficiency is driven by 'Digital Acceleration' and 'Delivery Optimization' to improve brand contribution margins, which were 11.7% in Q2 FY26.

Logistics & Distribution

Distribution is optimized through digital transformation in HR and operational processes to enhance agility and support a future-ready talent pool.

📈 Strategic Growth

Expected Growth Rate

39%

Growth Strategy

Growth is driven by a 'Focused and Scalable Expansion' strategy targeting Tier II and Tier III cities, penetration into institutional channels like airports and food courts (e.g., Devyani PVR INOX JV), and the turnaround of the Sky Gate portfolio to breakeven by March 2026.

Products & Services

Quick Service Restaurant (QSR) products including fried chicken, pizza, coffee, biryani, burgers, and bubble tea.

Brand Portfolio

KFC, Pizza Hut, Costa Coffee, Vaango, Biryani By Kilo, Goila Butter Chicken, Tealive, New York Fries, Sanook Kitchen.

New Products/Services

Launched 'Chana Burger' and 'Epic Savers' campaign to cater to value-conscious consumers; testing 'Tealive' bubble tea with 6 initial outlets.

Market Expansion

Expanding into food courts via Devyani PVR INOX Private Limited and increasing international footprint in Thailand, which showed strong performance with 16.7% brand contribution margins.

Strategic Alliances

Joint Venture with PVR INOX (Devyani PVR INOX) for food court operations; franchise agreements for Yum! Brands (KFC, Pizza Hut) and Costa Coffee.

🌍 External Factors

Industry Trends

The QSR industry is seeing a shift toward 'value layers' and institutional channel penetration (airports/transit zones) to offset weak high-street demand. DIL is positioning itself by diversifying its brand portfolio and optimizing delivery.

Competitive Landscape

Competes with other global and local QSR players; currently focusing on 'Epic Savers' to compete in the value segment.

Competitive Moat

Moat is built on a diversified portfolio of global iconic brands (KFC, Pizza Hut) and a strong presence in high-traffic transit hubs. Sustainability is supported by a robust internal control framework and strategic expansion into under-penetrated Tier II/III cities.

Macro Economic Sensitivity

High sensitivity to inflation and consumer sentiment; management notes that demand remains weak and consumers are becoming highly value-conscious.

Consumer Behavior

Shift toward value-conscious purchasing; consumers respond well to promotions but demand drops when promotions are withdrawn.

Geopolitical Risks

Exposure to international market volatility in Nigeria, Thailand, and Nepal.

⚖️ Regulatory & Governance

Industry Regulations

Compliance with food safety standards and local restaurant licensing across 32 Indian states and 3 international countries.

Environmental Compliance

Disclosures made under Business Responsibility & Sustainability Report (BRSR) on a standalone basis.

Taxation Policy Impact

Subject to standard corporate tax; impacted by the introduction of GST 2.0, though the full impact is still being assessed.

⚠️ Risk Analysis

Key Uncertainties

Integration and turnaround of the Sky Gate portfolio, which currently operates at a brand-level loss (approx. INR 3-3.5 Cr quarterly); sustainability of margins amidst high promotional intensity.

Geographic Concentration Risk

India accounts for the majority of operations (32 states/UTs), with specific regional risks like heavy rains in East India impacting KFC sales during Pujo.