Devyani International Q4 Results Review - No Light At The End Of The Tunnel: HDFC Securities

HDFC Securities Institutional Equities

Devyani International Ltd.’s Q4 FY24 results were below our estimates, as core brands (KFC and Pizza Hut) disappointed on the same-stores sales growth front.

Although the India gross margin expanded c200 bps YoY, operating deleverage (KFC SSS declined 7%; whereas Pizza Hut saw 14% SSS decline) dented domestic profitability (flat Ebitda growth versus revenue growth of 11% YoY).

Further adding to woes, currency devaluation (Nigerian business) relating to international business dragged overall performance (consolidated Ebitda grew 5% YoY only).

We continue to maintain our Reduce rating with a target price of Rs 150 (25 times FY26 Pre IND-AS EV/Ebitda), as current valuations are fully factoring in a back-ended recovery (revenue/Ebitda compound annual growth rate of 27/33% over FY24-27).

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