Devyani's Demand Story Is Holding Up; Macquarie Says Next Trigger Is Consumer Recovery

The operator of KFC, Pizza Hut and Costa Coffee outlets in India, Devyani International'sJune quarter earnings reinforced signs of improving demand across its restaurant portfolio, with healthy same-store sales growth in KFC, Costa Coffee and its other brands. 

While Macquarie said the quarter was largely in line with expectations, the brokerage believes a broader pickup in consumer demand will remain the key catalyst for the stock going forward.

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What did Macquarie Say?

• Maintained Outperform with a target price of Rs 130.
• Said the June-quarter performance was largly in line with expectations.
• Believes a broader demand pickup will be the key trigger going ahead.
• Highlighted healthy same-store sales growth across KFC, particularly in dine-in, Costa Coffee and the company's other brands.
• Noted that same-store sales growth at KFC and Pizza Hut remained weaker than peer Sapphire Foods.

Devyani's Q1 Show

Devyani International reported a nearly four-fold jump in net profit to Rs 14.6 crore for the June quarter of FY27 from Rs 3.7 crore a year ago (Q1FY26), while revenue rose 16.5% year-on-year (YoY) to Rs 1,581 crore.

Operating performance also improved, with earnings before interest, tax, depreciation and amortisation (EBITDA) rising to Rs 29 crore in Q1FY27 from Rs 12 crore in Q1FY26, while EBITDA margin expanded to 1.8% from 0.9%. Other income increased to Rs 19.2 crore from Rs 13.5 crore in the year-ago period.

Across brands, KFC posted 3.3% same-store sales growth, while Costa Coffee reported 10.2%. Biryani By Kilo and Vaango delivered 7.2% and 7.1% same-store sales growth, respectively, while Pizza Hut continued to show sequential improvement. 

The company ended the quarter with a network of 2,255 stores and said it remains on track to meet its FY27 store expansion targets.

Chairman Ravi Jaipuria said the company carried forward the momentum built during the second half of FY26, led by KFC's continued double-digit sales growth and broad-based improvement across its portfolio. He added that despite inflation in LPG and wages, the company delivered its highest-ever quarterly EBITDA and maintained focus on profitable growth.

Jaipuria also said the proposed merger with Sapphire Foods remains on track after receiving approvals from the NSE and BSE, with completion targeted by the end of FY27. He noted that the new leadership team is now in place as the company advances its "DIL 2.0" transformation strategy.

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