Devyani International Limited — Q4 FY25 earnings call

Call held 23 May 2025

Management summary

Devyani International delivered strong top-line growth in FY25, largely fueled by the strategic consolidation of KFC stores in Thailand. While the company continues its aggressive store expansion (adding 257 stores), it faced significant headwinds in India, including bird flu impacts in the South and weak urban consumption. Management is pivoting towards a multi-brand strategy, recently adding Biryani By Kilo to its portfolio, while simultaneously working with Yum! Brands to revive the struggling Pizza Hut segment.

Highlights

  • Consolidated FY25 revenue reached ₹4,951 crore, a robust 39.2% YoY growth, primarily driven by Thailand KFC acquisition.

  • Total store count crossed the 2,000 mark to reach 2,039 stores as of March 31, 2025, with 257 net new additions in FY25.

  • Consolidated EBITDA margin stood at 17% (post-IndAS), with absolute EBITDA increasing 29.1% over FY24.

  • KFC India reported revenue of ₹2,179 crore (+6.6% YoY), though Average Daily Sales (ADS) dipped to ₹94,000 from ₹105,000.

  • Acquisition of Sky Gate Hospitality (Biryani By Kilo) announced at an equity valuation of ₹519 crore for an 80.72% stake.

  • PBT for FY25 grew by 248% to ₹12.8 crore compared to ₹3.7 crore in FY24.

Key financials

  1. Consolidated Revenue ₹4,951 Cr +39.2%YoY
  2. EBITDA Margin (Post-IndAS) 17%
  3. Profit Before Tax (PBT) ₹12.8 Cr +248%YoY
  4. Gross Margin 68.9% -1.4%YoY

What they filed

Q1 FY27: revenue up 8.9%, net profit up 36.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue836 873 801 917 871 +4%906 +4%879 +10%999 +9%
EBITDA146 146 137 151 131 −10%158 +8%144 +5%169 +12%
Net profit1 4 -13 6 -14 −1505%-12 −385%-13 +4%9 +37%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • KFC India
    ₹2,179 Cr Revenue₹94,000 ADS696 stores Store Count
  • Pizza Hut India
    ₹732 Cr Revenue₹34,000 ADS2.7% Contribution Margin
  • Costa Coffee
    ₹199 Cr Revenue30.8% Revenue Growth220 stores Store Count
  • International Business
    ₹419 Cr Q4 Revenue64.2% Gross Margin

Guidance & targets

Volume

  • KFC India New Store Additions Volume · FY26 · High confidence 110-120
    As far as KFC is concerned... We have talked about adding about 110 to 120 stores this year and we are on course of that.

    — Manish Dawar, CFO

Profitability

  • Sky Gate (Biryani By Kilo) Turnaround Profitability · FY26 · Medium confidence 1 year
    On an organic basis, we will be able to turn around the brand in one year's time.

    — Manish Dawar, CFO

Margin

  • KFC ROM (Restaurant Operating Margin) Margin · next 2 years · Medium confidence 20%
    As said earlier, once we can hit 100,000-105,000 ADS, we will be able to get back to ~20% margins.

    — Manish Dawar, CFO

Other

  • Capital Infusion in Sky Gate Other · Immediate · High confidence ₹90 crore
    We will also be infusing up to Rs. 90 crore cash by way of additional capital in the business.

    — Manish Dawar, CFO

Risks & concerns

  • Cannibalization of existing stores

    medium

    Rapid expansion from 300 to 700 KFC stores has led to some cannibalization, lowering the 'new normal' ADS from 120k to 100k-105k.

    Management acknowledged

  • Input cost inflation

    medium

    Inflation in palm oil, chicken, flour, and raw coffee beans is pressuring gross margins; management is hesitant to take price hikes during a consumption slowdown.

    Both acknowledged

  • Geopolitical sensitivity

    low

    Geopolitical situations continue to impact sales performance in specific states like Kerala and West Bengal.

    Management acknowledged

Areas of evasion (1)

  • Specific details on the exact 'innovation' plan for Pizza Hut were deferred to the next quarter.

Q&A highlights

2 direct
KFC ADS hitting multi-quarter lows Direct
We have seen the impact of bird flu, which was in Andhra Pradesh and Telangana this year, which lasted for about 72 to 75 days. This has primarily pushed down the table on SSSG as well as the ADS.

Explains that the sharp drop in KFC's core performance was due to transient external factors rather than structural brand decay.

Asked by Vivek Maheshwari (Jefferies)

Revival plan for Pizza Hut Partial
We are in discussions with Yum! in terms of how we can turn around the brand because most of the levers in terms of innovation, price point, promotions... are controlled by Yum!.

Highlights the dependency on the global franchisor for brand turnaround and confirms that growth has been intentionally slowed due to poor unit economics.

Asked by Jignanshu Gor (Bernstein)

Portfolio complexity and management bandwidth Direct
Every brand gets a completely independent focus as far as the brand team is concerned. There is a separate CEO, marketing team, and operations team for each brand.

Addresses investor concerns regarding the rapid addition of new brands (Biryani By Kilo, New York Fries, Tealive) and how management plans to avoid operational 'accidents'.

Asked by Vivek Maheshwari (Jefferies)

2 min read 5 chapters

Detailed narrative

Thailand Acquisition Fuels Consolidated Growth

The consolidation of KFC Thailand was the primary driver for the 39.2% YoY revenue growth in FY25, bringing consolidated revenue to ₹4,951 crore. The international business contributed ₹419 crore in Q4 alone, with gross margins improving by 300bps YoY to 64.2%. While the Thailand business is currently PAT negative due to aggressive depreciation policies, management confirmed it is cash self-sufficient and serves as a platform to launch other brands like Tealive.

KFC India: Navigating Transient Headwinds

KFC India faced a challenging year with ADS dropping to ₹94,000 for FY25 and ₹83,000 in Q4. This was attributed to a 75-day bird flu impact in Andhra Pradesh and Telangana, alongside geopolitical issues in Kerala and West Bengal. Despite this, management remains bullish, targeting 110-120 new KFC stores in FY26 and maintaining that margins can return to 20% once ADS recovers to the 100k-105k range.

Strategic Entry into the Biryani Category

The acquisition of an 80.72% stake in Sky Gate Hospitality (Biryani By Kilo) for ₹519 crore marks DIL's entry into the high-potential Indian cuisine space. Management plans to infuse ₹90 crore of capital to turn the currently loss-making business around within one year. Synergies are expected through material sourcing, labor deployment, and housing these brands within DIL's existing food court and airport infrastructure.

Pizza Hut Revival and Store Rationalization

Pizza Hut India continues to underperform with an ADS of ₹34,000 and a meager 2.7% contribution margin. DIL has intentionally slowed expansion, adding only 63 net stores in FY25 and closing 14 stores in Q4. Management is in active discussions with Yum! Brands to 'reformat' the brand, focusing on smaller delivery-centric formats and value-driven menu innovations to compete with market leaders.

Margin Management and Input Inflation

Consolidated gross margins saw a slight dip to 68.9% in FY25 from 70.3% in FY24, pressured by rising costs of cooking oil, chicken, and coffee beans. Management has chosen to absorb these costs rather than take price hikes to avoid further dampening consumer demand. They are instead focusing on 'value layers' and promotional balancing to maintain footfalls while waiting for input prices to stabilize.

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