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    Devyani International Q1 FY27 earnings call

    DEVYANI
    Consumer Services·29 Jul 2026
    Management Summary

    Devyani International Limited reported a strong Q1 FY27, with consolidated revenue up 16.5% YoY to INR 1,581 crore and record Operating EBITDA of INR 151 crore. KFC and own brands showed positive SSSG, while Pizza Hut continued to struggle. The company is navigating a challenging macro environment and progressing with the Sapphire Foods merger, aiming for completion by FY27 end.

    Highlights

    5

    • Consolidated revenues grew 16.5% year-on-year to INR 1,581 crore.

    • Operating EBITDA grew nearly 38% year-on-year to INR 151 crore, achieving a 9.6% margin, the highest ever.

    • KFC posted a positive SSSG of 3.3% and nearly 12% YoY revenue growth to INR 684 crore.

    • Biryani By Kilo, Costa, and Vaango maintained a 7% plus SSSG growth trajectory.

    • International business delivered strong growth with over 20% YoY revenue increase to INR 523 crore and 18.2% Brand Contribution margin.

    Concerns

    3

    • Pizza Hut reported a Brand Contribution loss of INR 4 crore and SSSG of -2.2%.

    • Macroeconomic challenges including elevated crude oil prices, LPG and fuel costs, rupee pressure, and RBI's moderated FY27 growth outlook (6.6%) and raised inflation projection (5.1%).

    • Food commodity inflation, minimum wage hikes, and higher utility costs impacted profitability, though mitigated by price increases.

    Key financials

    Single quarter

    06 metrics
    1. 01Consolidated Revenue₹1,581 Cr+16.5%YoY
    2. 02Consolidated Gross Margin69.1%
    3. 03Consolidated Brand Contribution₹224 Cr+26%YoY
    4. 04Consolidated Operating EBITDA₹151 Cr+38%YoY
    5. 05Operating EBITDA Margin9.6%

    Segment breakdown

    RevenueGross MarginBrand ContributionBrand Contribution Margin
    KFC₹684 Cr69.4%₹115 Cr—
    Pizza Hut₹184 Cr76.3%₹-4 Cr—
    Own Brands (Vaango, Biryani By Kilo)₹98 Cr65.9%₹10 Cr10.2%
    Franchise Brands (Costa Coffee)—74.6%—15.1%
    International Business₹523 Cr——18.2%
    Heatmap· 4 shared metrics

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    M&A

    Sapphire Foods

    merger · pending regulatory

    Guidance & targets

    6
    CategoryTargetPriority
    SSSG
    KFC SSSG
    5% to 6%
    		Medium
    Profitability
    KFC Brand Contribution Margin
    20%
    		Medium
    Sales Mix
    KFC Dine-in Salience
    59%-60%
    		Medium
    Revenue
    Biryani By Kilo Revenue
    INR 1,000 crore
    		High
    M&A
    Sapphire Foods Merger Completion
    by end of current financial year (FY27)
    		High
    Strategy
    Pizza Hut Focus
    full energy behind the brand
    		High

    What to watch in Q2 FY27

    5

    Sapphire Foods Merger Completion

    by FY27
    CurrentApprovals from NSE and BSE received; broadly on track.
    TargetMerger completed by end of FY27.

    Why it matters

    Merger is key to creating a stronger combined platform and realizing synergies, impacting future growth and profitability.

    Ravi Jaipuria: "The timelines are broadly on track with our stated target of completion by the end of FY 2027."

    Risks & concerns

    4
    RiskSeverity

    Macroeconomic Headwinds

    Elevated crude oil, LPG, fuel costs, rupee pressure, RBI's moderated growth outlook (6.6%) and raised inflation projection (5.1%) create a volatile operating environment. — Management acknowledged

    medium

    Inflationary Pressures

    Food commodity inflation, minimum wage hikes, annual increments, LPG prices, utility costs, and wage costs are impacting profitability, though partially mitigated by price increases. — Management acknowledged

    medium

    Seasonal Demand Volatility / El Niño

    Forecast of a below-normal season combined with El Niño risk could impact consumption recovery, as demand rarely moves in a straight line. — Management acknowledged

    low

    Competitive Intensity (Aggregators vs. Dine-in)

    The interplay between aggregator platforms and dine-in led brands is an evolving dynamic that needs thoughtful navigation, as delivery can cannibalize dine-in sales. — Management acknowledged

    medium

    Q&A highlights

    8

    “the key driver for improving the Brand Contribution margin remains the ADS number, I have also indicated in the past that, let us say, once we cross a threshold of 105,000 ADS to 110,000 ADS, we will be able to cross 20% Brand Contribution margins in KFC as we have demonstrated that in the past.”

    Clarifies the key operational metric (ADS) and its target for achieving the desired margin level, providing a measurable goal for investors.

    asked by Percy Panthaki

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Q1 FY27 Performance Driven by KFC and Own Brands

    Devyani International Limited delivered a robust Q1 FY27, with consolidated revenues growing 16.5% year-on-year to INR 1,581 crore. This performance was underpinned by KFC, which posted a positive Same-Store Sales Growth (SSSG) of 3.3% and nearly 12% YoY revenue growth to INR 684 crore. The company's own brands, Biryani By Kilo and Vaango, also showed strong momentum, maintaining a 7% plus SSSG trajectory. This positive growth contributed to the highest-ever Operating EBITDA of INR 151 crore, representing a 9.6% margin.

    02

    Profitability Improvement Amidst Cost Pressures

    The company achieved an improvement in profitability, with Gross Margin at 69.1% (up 0.9% YoY) and Brand Contribution expanding 1.1% to 14.2% (INR 224 crore, up 26% YoY). This was achieved despite facing significant cost inflation, particularly in LPG prices, minimum wages, and utility costs. Management implemented slight price increases in KFC and Pizza Hut to mitigate these impacts, demonstrating effective cost management.

    03

    Pizza Hut Turnaround Strategy Underway

    Pizza Hut continued to be a challenging segment, reporting a negative SSSG of -2.2% and a Brand Contribution loss of INR 4 crore. However, management emphasized a 'back to basics' approach, focusing on product quality, ingredients, and innovative ideas to build a sustainable growth foundation. The full energy behind Pizza Hut is expected to be deployed by FY28, following the completion of the Sapphire Foods merger.

    04

    Strategic Focus on Dine-in Channel and Own Brands Expansion

    Devyani is actively rebalancing its investment towards the dine-in channel, particularly for KFC, aiming to increase dine-in salience to 59%-60% from the current 57%. This strategy is driven by the belief that dine-in offers the best customer experience and profitability. For its own brands, Biryani By Kilo is being tested in dine-in formats and airport locations, with an ambitious target of reaching INR 1,000 crore in revenue within the next few years, leveraging the large and growing Indian food category.

    05

    Progress on Sapphire Foods Merger and Leadership Strengthening

    The merger process with Sapphire Foods is on track, having received approvals from NSE and BSE in June, with completion targeted by the end of FY27. Management believes the integration will be smooth due to similar IT systems and processes. The company has also strengthened its leadership team, with new hires in COO, CTO, and Chief Marketing Officer roles, aiming to build 'DIL 2.0' and drive cultural and operational shifts.

    06

    Navigating Macroeconomic Headwinds

    The quarter presented a mixed macroeconomic picture, with external challenges🌐 including elevated crude oil prices, impacting LPG and fuel costs, and a depreciating rupee. The RBI's moderated FY27 growth outlook of 6.6% and raised inflation projection of 5.1% indicate a volatile operating environment. Additionally, the forecast of a below-normal monsoon and El Niño risk pose potential challenges to consumption recovery in India.

    This is an AI-generated summary of a publicly available earnings call transcript.