ADVERTISEMENT

Devyani International Q1 Review - Deceleration In Pizza Category Continues; Maintain 'Sell': Dolat Capital

KFC’s brand contribution contracted on YoY basis to 21.1% and Pizza Hut at 10.1%.

<div class="paragraphs"><p>Devyani International Ltd. (Source: Company website)</p></div>
Devyani International Ltd. (Source: Company website)

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Dolat Capital Report

Devyani International Ltd.’s revenue, Ebitda and adjusted profit after tax came below our estimate. The company reported 20.1% revenue growth driven by 22/11/83% revenue growth across KFC/Pizza Hut/Costa Coffee.

KFC’s brand contribution contracted on YoY basis to 21.1% and Pizza Hut at 10.1%.

Devyani International added 47 stores during Q1 FY24 taking the total count to 1,290. We believe that the company would add ~275-300 stores in FY24 with cluster based approach and penetration strategy.

Due to high inflation, gross margin contracted by 170 basis points at 69.6% while Ebitda margin declined by 430 bps to 19.9%. High milk prices and lower operating leverage impacted the margin performance.

Though in the long run we remain optimistic on the domestic quick service restaurant industry in the near term, we believe that the industry would witness pressure due to economic slowdown.

To factor in Q1 performance and full tax rate, we have reduced our FY24/25E earnings per share estimates by 22/17% at Rs 2.2/3.3. Target price at Rs 158 (48 times FY25E EPS). Maintain 'Sell'.

Click on the attachment to read the full report:

Dolat Capital Devyani International Q1FY24 Result Update.pdf
Opinion
Sapphire Foods Q1 Results Review- Pizza Business Continues To Witness Pressure; Maintain 'Sell': Dolat Capital

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.