HDFC Securities' research report on Devyani International
Mirroring its sister franchisee, Devyani reported an operationally weak Q4FY23 performance on moderating SSSG. Revenue growth of 28% YoY was led by 33% store addition. SSSG was weak for both KFC/PH at +2/-3% (Sapphire: +2/-4%) due to a tough demand environment. Negative oplev due to weak SSSG led to margin pressure across the business. Devyani’s KFC/PH ROM fell 220/490bps QoQ to 17.5/9.3% (Sapphire 110/530bps to 19/8.6%; JUBI 230bps to c.18%). Management has maintained its medium-term guidance of mid-single-digit SSSG growth and 300 stores addition. In the near term, we expect decelerating trend to continue with sustained pressure on operating margin.
Outlook
We maintain our EPS estimates and value Devyani at 50x P/E on Jun’25 EPS to arrive at a TP of INR 115. Maintain REDUCE.
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