Reduce Devyani International; target of Rs 160: Emkay Global Financial

Emkay Global Financial recommended reduce rating on Devyani International with a target price of Rs 160 in its research report dated November 12, 2024.

Broker Research

November 12, 2024 / 13:03 IST

Reduce

26 Aug, 2025 12:21

Volume

Todays L/H

Emkay Global Financial's research report on Devyani International

DIL’s Q2 EBITDA was ~13% below our estimate, on margin miss in KFC and higher HO costs. India growth was modest at ~6% in Q2, mainly led by store adds, as KFC/PH India SSG fell 6-7% on weak demand and negative sentiment in a few regions (geo-politics). While DIL is seeing greenshoots in some large markets, overall trend is subdued; but DIL sees this as a blip and continues with network expansion, menu innovation, and portfolio enhancement. Also, it is testing demand sensitivity with differential pricing across market tiers. DIL signed franchise agreements with 3 brands—Tealive, New York Fries, Sanook Kitchen—which have potential to lead growth at attractive payback/royalty terms; but we await more clarity on this. Store additions have picked up, with 85 adds in Q2 (vs 54 in Q1); FY25 guidance of reaching store-count of 2,000 is intact.

Outlook

The Q2 miss leads us to cut EBITDA/TP by 10-11%. While we are confident about KFC’s category dominance and leading metrics, near-term weakness presses us to retain REDUCE (TP: Rs160; 27x Sep-26E EBITDA).

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