Devyani International Limited — Q4 FY26 earnings call

Call held 21 May 2026

Management summary

Devyani International reported a strong Q4 FY26, driven by robust performance in KFC and international markets, with consolidated revenue growing 18.5% YoY. The company is progressing with its merger with Sapphire Foods and transforming its management team for future growth. While Pizza Hut faced SSSG challenges, own brands showed positive momentum, and the company plans to add 200-225 new stores in FY27.

Highlights

  • Consolidated Q4 revenue grew 18.5% YoY to ₹1,437 crores, with FY26 revenue reaching ₹5,611 crores.

  • KFC posted 4.9% positive SSSG and nearly 15% year-on-year growth, with Q4 revenues of ₹586 crores and brand contribution of ₹99 crores (17.0% margin).

  • International business grew 20% year-on-year, crossing ₹500 crores in quarterly revenues, with brand contribution margins of 17.7%.

  • Own brands (Vaango, Biryani By Kilo) maintained mid-single-digit positive SSSG, and Biryani By Kilo achieved positive brand contribution.

  • The proposed merger with Sapphire Foods is on track for completion by the end of the current fiscal year.

Concerns

  • Pizza Hut reported a negative SSSG of 3.7% and slightly negative brand contribution due to operating deleverage.

  • Franchise Brands (Costa Coffee) experienced a 1.2% year-on-year decline in gross margins due to elevated coffee and cocoa prices.

  • The company decided to discontinue the Tea Live brand in the next quarter after testing in India and Thailand.

Key financials

2 periods

Headline

  • Consolidated Q4 Revenue
    ₹1,437 Cr
    YoY +18.5%
  • Consolidated FY26 Revenue
    ₹5,611 Cr
  • Consolidated Operating EBITDA
    ₹123 Cr
    YoY +13.8%
  • Consolidated Operating EBITDA Margin
    8.6%
  • Consolidated FY26 Gross Margin
    68.8%
  • Consolidated FY26 Brand Contribution
    14.1%

FY26

  • Total Stores
    2,256 stores
  • Net Store Additions
    217 stores

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
    4.9% SSSG₹586 Cr Q4 Revenue15% Q4 YoY Growth₹99 Cr Q4 Brand Contribution17% Q4 Brand Contribution Margin783 stores FY26 Stores (India)
  • Pizza Hut
    -3.7% SSSG₹30,000 ADS639 stores FY26 Stores
  • Own Brands (Vaango, Biryani By Kilo)
    — SSSG— Biryani By Kilo Brand Contribution
  • Franchise Brands (Costa Coffee)
    3% Revenue Growth-1.2% Gross Margin Decline16.1% Brand Contribution Margin
  • International Business
    20% Q4 Revenue Growth₹500 Cr Q4 Quarterly Revenue17.7% Q4 Brand Contribution Margin₹89 Cr Q4 Brand Contribution

Capital allocation

high confidence
  • Capex Capex disclosed within existing budgets for tech-related changes
    • New store additions (200-225 in FY27)
    • Tech-driven initiatives and AI integration
    As I said during the call where we announced the merger, we will be able to manage all the tech-related changes within our existing budgets, including whatever charges we pay to the Yum!.
  • Debt Debt disclosed
    • New borrowing Temporary debt raised for equity infusion in Thailand, squared off by the second week of April.
    So that was only temporary, we raised some debt because there was some equity infusion required in Thailand. It has got already squared off by the second week of April.
  • M&A Sapphire Foods Merger · Pending regulatory

    Strategic combination to create one of the largest QSR platforms globally, diversify portfolio, expand geography, and enhance operational capabilities.

    Expected to unlock meaningful synergies and accelerate growth.

    Our proposed merger with Sapphire Foods is a strategic combination of two scaled up and complementary platforms, united by a shared vision for long-term growth. Upon completion, the merged entity will emerge as one of the largest QSR platforms globally and as one of the largest partners for Yum!, with a diversified portfolio of leading brands, expanded geography reach and enhanced operational capabilities. The merger is expected to unlock meaningful synergies, strengthen execution and create a more agile and efficient organization, capable of accelerating growth across markets. I am pleased to share that the process is progressing as per plan, and we remain on track to complete the merger by the end of the current fiscal year.
  • M&A Biryani By Kilo Acquisition · Integrated

    Consolidation of Biryani By Kilo led to increase in intangible assets (goodwill).

    Predominantly reflected in the goodwill, along with the brands, contributing to increased intangible assets.

    So, it is predominantly Biryani By Kilo consolidation Devanshu, because the consideration that we paid, obviously, will go and sit predominantly on the intangible side. So, if you want the details, we can connect offline, and we'll be able to share them with you then. But it is predominantly Biryani By Kilo that is reflected in the goodwill, along with the brands.

Guidance & targets

Store Count

  • Net New Stores Store Count · FY27 · High confidence 200 to 225
    We expect to add approximately 200 to 225 net new stores in FY27 as DIL.

    — Manish Dawar

  • KFC New Stores Store Count · FY27 · High confidence 100 to 110
    KFC is expected to contribute 100 to 110 stores of these additions with the balance being driven by Costa Coffee, Biryani By Kilo and international businesses.

    — Manish Dawar

Merger

  • Completion of Sapphire Foods Merger Merger · FY27 · High confidence by end of current financial year
    We continue to expect completion of the merger by end of the current financial year.

    — Manish Dawar

Management Team

  • New Management Team in Place Management Team · Q1 FY27 · High confidence by next quarter
    I am happy with the progress made and feel very confident that we will be able to largely have the new team in place by next quarter.

    — Ravi Jaipuria

What to watch in Q1 FY27

Sapphire Foods Merger Completion

by end of current financial year (FY27)
Current Process on track, filings completed, awaiting regulatory approvals
Target Merger completed

Why it matters

This is a major strategic combination expected to create one of the largest QSR platforms globally and drive future growth.

We continue to expect completion of the merger by end of the current financial year.

Risks & concerns

  • Geopolitical tensions and macroeconomic instability

    medium

    Geopolitical tensions and macro issues are a reality, but they also lead to consolidation in the industry, putting pressure on small-scale players. The gas crisis, stemming from the Middle East war, continues to be monitored.

    Management acknowledged

  • Pizza Hut underperformance

    medium

    Pizza Hut recorded a negative SSSG of 3.7% and slightly negative brand contribution, requiring portfolio consolidation and operational discipline.

    Management acknowledged

  • Input cost inflation for Franchise Brands

    low

    Elevated coffee and cocoa prices led to a 1.2% year-on-year decline in gross margins for Franchise Brands, despite steady revenue growth.

    Management acknowledged

Q&A highlights

7 direct, 1 evasive
Leadership changes and their impact on growth Direct
We have hired Neeraj Tiwari, who is going to be the CTO for the company going forward. We have also hired Sandeep Anand as Chief Marketing Officer and he will also be looking after Pizza Hut operations. We have also made an announcement for the COO today. This gentleman also will be joining us in the next couple of weeks.

Details the new leadership hires and their roles, indicating a strategic focus on technology, marketing, and operations for future growth.

Asked by Devanshu Bansal

Sustainability of improved dine-in footfalls and company initiatives Direct
We have done some experiments to treat the two channels as two different businesses, which is what again I have alluded in the past. And therefore, that is showing some results. It is just the start of the journey. We have to cover a lot of gaps from there, but we are encouraged with what we have done and the response that we have seen from the consumers.

Explains the strategy behind the recovery in dine-in footfalls, emphasizing differentiated offerings for online vs. offline channels and positive consumer response.

Asked by Devanshu Bansal

Store opening strategy, closures, and FY27 guidance Direct
We are planning to open about 200 to 225 new stores during the year, of which KFC will account for about 100 to 110, 120 kinds of store levels. At the same time, we have communicated in the past that for 2026, I am talking about calendar year 2026 here, we are not planning to add any net new stores for Pizza Hut.

Provides specific store addition guidance for FY27, clarifies the strategy for Pizza Hut (consolidation, no net new stores), and explains Q4 closures as part of a quality-focused reset.

Asked by Gaurav Jogani

Drivers of KFC gross margin expansion Direct
The raw material and packing material environment have been favourable. And at the same time, we tweaked the deals in favour of the dine-in customers more where we were lacking initially, and that has helped us to kind of improve the gross margins a little bit and drive the customers in the stores to deliver the SSSG.

Identifies key factors contributing to KFC's improved gross margins, including favorable input costs and a strategic shift in promotions towards dine-in customers.

Asked by Percy Panthaki

KFC SSSG drivers (AOV vs. transactions) and Pizza Hut revival strategy Direct
I think it is basically going down to the online and offline. So, if you see our past trends when we were losing SSSGs, we were losing more on dine-in versus the online channels... we have tried to reverse in the last quarter by focusing more on the offline channel... it is a combination of both [tickets and AOV].

Explains the shift in focus from online to offline channels as the primary driver for KFC's SSSG, noting that both transaction volume and average order value contributed. Also outlines the comprehensive plan for Pizza Hut's turnaround.

Asked by Jignanshu Gor

Future menu price increases given inflation Evasive
If you can help me foresee the inflation in the near future, I will be able to tell you that.

Management avoided committing to future price increases, indicating uncertainty regarding inflationary pressures and their pricing strategy.

Asked by Percy Panthaki

Biryani By Kilo's profitability and future outlook Direct
Biryani By Kilo, as I said, we have managed to turn the brand around. As, you know, it was a loss-making brand. There is further potential because right now, we have basically brought the negative to positive... we are very bullish on Biryani By Kilo, and it can do wonders once we are able to stabilize the performance.

Confirms the successful turnaround of Biryani By Kilo to positive brand contribution and outlines plans for further expansion and stabilization, highlighting its potential as a growth driver.

Asked by Devanshu Bansal

Increase in debt and intangible assets in FY26 Direct
So, it is predominantly Biryani By Kilo consolidation Devanshu, because the consideration that we paid, obviously, will go and sit predominantly on the intangible side. So, if you want the details, we can connect offline, and we'll be able to share them with you then. But it is predominantly Biryani By Kilo that is reflected in the goodwill, along with the brands. ... So that was only temporary, we raised some debt because there was some equity infusion required in Thailand. It has got already squared off by the second week of April.

Clarifies that the increase in intangible assets is primarily due to the Biryani By Kilo consolidation and that the debt increase was temporary for a Thailand equity infusion, already resolved.

Asked by Devanshu Bansal

2 min read 6 chapters

Detailed narrative

Strong Q4 FY26 Performance Driven by KFC and International Growth

Devyani International reported a robust Q4 FY26, with consolidated revenue growing 18.5% year-on-year to ₹1,437 crores, contributing to a full-year revenue of ₹5,611 crores. KFC was a standout performer, achieving its strongest results in 14 quarters with 4.9% positive Same-Store Sales Growth (SSSG) and a 15% year-on-year revenue increase to ₹586 crores. The international business also demonstrated significant growth, with revenues crossing ₹500 crores for the first time in a quarter, marking a 20% year-on-year increase.

Strategic Merger with Sapphire Foods on Track

The proposed merger with Sapphire Foods is progressing as planned and is expected to be completed by the end of the current financial year. This strategic combination aims to create one of the largest QSR platforms globally, enhancing operational capabilities, diversifying the brand portfolio, and expanding geographic reach. Management anticipates significant synergies and accelerated growth post-merger.

DIL 2.0 Transformation and Leadership Reinforcement

The company is embarking on 'DIL 2.0,' a transformation journey led by a strengthened management team. Key hires include a new CTO (Neeraj Tiwari), CMO (Sandeep Anand, also overseeing Pizza Hut operations), and a COO. This initiative focuses on leveraging technology, automation, and AI to enhance efficiency, scalability, and customer experience, with over 80% digital kiosk penetration already achieved across KFC stores.

Mixed Performance in Key Brands and Store Expansion Plans

While KFC and own brands (Vaango, Biryani By Kilo) showed positive SSSG, Pizza Hut recorded a negative SSSG of 3.7% and slightly negative brand contribution. The company plans to add 200-225 net new stores in FY27, with KFC contributing 100-110 stores. Pizza Hut will focus on portfolio consolidation and realignment in calendar year 2026, with no net new store additions. The Tea Live brand will be discontinued in the next quarter.

Focus on Dine-in Experience and Operational Discipline

Management highlighted a strategic shift to prioritize the dine-in experience, offering better deals at the store level to attract customers, which has contributed to KFC's SSSG. This approach, coupled with disciplined execution, aims to protect unit economics and maintain financial prudence. The company is also actively managing input costs, such as the impact of the gas crisis, by exploring alternatives like electrical equipment for Biryani By Kilo.

Biryani By Kilo Turnaround and Future Potential

Biryani By Kilo, previously a loss-making brand, has successfully achieved positive brand contribution. The company is bullish on its future, having initiated measured expansion into offline channels through test launches of smaller Express formats, which have shown profitability. This brand is expected to be a significant growth driver once its performance stabilizes.

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

More Consumer Services earnings calls