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    Devyani Intl.

    DEVYANIGood
    Consumer Services·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

    6

    • 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.

    What Changed2

    vs Q1 FY26

    Tone shiftNeutral → GoodRisks discussed4 → 3 (-1)

    Key financials

    Single quarter

    04 metrics
    1. 01Consolidated Revenue₹4,951 Cr+39.2%YoY
    2. 02EBITDA Margin (Post-IndAS)17%
    3. 03Profit Before Tax (PBT)₹12.8 Cr+2.5%YoY
    4. 04Gross Margin68.9%-1.4%YoY

    Segment breakdown

    KFC India
    ₹2,179 Cr Revenue94,000 Rs ADS696 stores Store Count
    Pizza Hut India
    ₹732 Cr Revenue34,000 Rs ADS2.7% Contribution Margin
    Costa Coffee
    ₹199 Cr Revenue30.8% Revenue Growth220 stores Store Count
    International Business
    ₹419 Cr Q4 Revenue64.2% Gross Margin
    List

    Guidance & targets

    4
    CategoryTargetPriority
    Volume
    KFC India New Store Additions
    110-120
    		High
    Profitability
    Sky Gate (Biryani By Kilo) Turnaround
    1 year
    		Medium
    Margin
    KFC ROM (Restaurant Operating Margin)
    20%
    		Medium
    Other
    Capital Infusion in Sky Gate
    ₹90 crore
    		High

    Risks & concerns

    4
    RiskSeverity

    Cannibalization of existing stores

    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

    medium

    Input cost inflation

    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

    medium

    Geopolitical sensitivity

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

    low

    Areas of Evasion(1)

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

    Q&A highlights

    3

    “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)

    2 min read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.