Buy Devyani International; target of Rs 180: Motilal Oswal

Motilal Oswal is bullish on Devyani International recommended buy rating on the stock with a target price of Rs 180 in its research report dated January 06, 2026.

Broker Research

January 07, 2026 / 11:17 IST

Buy

Motilal Oswal's research report on Devyani International

Devyani International (DIL) and Sapphire Foods India (SAPPHIRE) have approved a scheme of arrangement for the merger of SAPPHIRE into DIL. The transaction consolidates Yum! Brands’ India operations under a single listed entity. The merger will be executed through a share swap, with 177 equity shares of DIL to be issued for every 100 equity shares of SAPPHIRE. Before the scheme becomes effective, SAPPHIRE’s promoter, Sapphire Foods Mauritius, will divest its ~18.5% equity stake in SAPPHIRE to DIL’s group company, Arctic International. The merger is aimed at unlocking scale benefits, improving unit economics through operating leverage and revised commercial terms, and strengthening execution across brands and geographies. After integration, the combined entity is expected to benefit from faster store expansion, procurement efficiencies, corporate overhead rationalization, and improved cash-flow generation. The merged company will have annualized revenue of ~INR78b (similar to JUBI) and a network of ~3,000 stores. As part of the transaction, DIL will acquire 19 KFC restaurants in Hyderabad for ~INR900m and make a one-time payment of ~INR3.2b to Yum! India for merger approval and additional territory rights. The merger integration is expected to be complete by the end of FY27.

Outlook

The merged entity, at 25x EV/EBITDA (pre-IND AS) on FY28E, gives a per share value of INR180 (similar to our current TP).

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