Accumulate Devyani International; target of Rs 180: KR Choksey

KR Choksey's research report on Devyani International

For Q3FY25, DEVYANI’s revenue was INR 12,944 Mn, a growth of 53.5% YoY and 5.9% QoQ, largely in line with our estimate. EBITDA for the quarter increased by 49.9% YoY (+10.3% QoQ) to INR 2,192 Mn, outperformed our estimate due to lower-than-expected employee costs. EBITDA margin stood at 16.9%, down by 41bps YoY but increasing by 68bps QoQ. Adj PAT stood at INR 56 Mn, lower by 42.3% YoY (+182.4%QoQ), underperformed our estimate due to deferred tax impact. We maintain our FY26E/FY27E EBITDA estimates, as the company’s operating performance exceeded our expectations, and the continued focus on international expansion is expected to be a key growth driver, while cost optimization initiatives in India and Nigeria, along with stabilization in the Nigerian currency, should further support margins. Additionally, the company’s strategic emphasis on innovation, customer engagement, and value-driven offerings is likely to accelerate its recovery trajectory. We estimate Revenue/ EBITDA to grow at 23.0%/23.5% CAGR for FY24-FY27E.

Outlook

The stock is currently trading at 21.2x/18.6x EV/EBITDA for FY26E/FY27E, respectively. We roll over our valuation to FY27E and apply an EV/EBITDA multiple of ~20x to arrive at a target price of INR 180/share (maintained). Given the upside potential of 11.8% from the CMP, we reiterate our “ACCUMULATE” rating on the shares of Devyani International Ltd.

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