Devyani International to acquire Biryani By Kilo, brokerages turn bullish on growth potential

Shares of the company closed at Rs 172, higher by 4.12 percent from the last close on the NSE. Devyani International's share price rallied over 10 percent last week.

Devyani International is preparing to expand its quick-service restaurant portfolio beyond global brands like KFC and Pizza Hut, setting its sights on homegrown biryani favourite Biryani By Kilo (BBK).

The company will hold a board meeting on April 24 to consider acquiring a controlling stake in Sky Gate Hospitality, the operator of BBK, along with other brands like Goila Butter Chicken, The Bhojan and Get-A-Way.

Brokerages have responded positively to the potential deal, citing opportunities in the fast-growing but fragmented biryani market and the strategic fit for Devyani. Emkay Global Financial Services upgraded the stock to Buy from Add, raising its target price by 18 percent to Rs 200 from Rs 170. The brokerage now values the stock at 30 times FY27 EBITDA, up from 26 times earlier.

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"The upgrade is led by potential value creation in the likely acquisition of BBK and the possible return of a mid-teen growth rate for the India business in FY26, compared to just 7 percent in FY25," the brokerage added.

Having launched operations in 2016 in Delhi-NCR, BBK has expanded to around 100 stores across 45 cities. Its revenue has grown at a CAGR of 55 percent between FY19 and FY24, touching Rs 300 crore. Emkay sees this as a promising entry point into a delivery-friendly segment that remains largely unorganised, offering ample headroom for expansion.

Kotak Institutional Equities also views the acquisition favourably, estimating that Sky Gate’s 106 outlets—including 65–70 cloud kitchens—generate about Rs 300 crore in revenue. The firm expects Devyani to fund the deal via equity issuance and pegs the valuation at 2–2.5 times EV/sales.

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Kotak reiterated its Buy rating, highlighting biryani as a Rs 200–250 billion category that is ripe for consolidation. "BBK has fared well among biryani QSRs and boasts superior average daily sales. We like this acquisition," it said, adding that the founders of Sky Gate are expected to continue running the business.

Shares of the company closed at Rs 172, higher by 4.12 percent from the last close on the NSE. Devyani International's share price rallied over 10 percent last week.