Devyani International Q3 Results Review - Weak Same-Store Sales Growth Drags Profitability: Motilal Oswal

NDTV Profit’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 NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Motilal Oswal Report.Devyani International Ltd. reported 6.6% YoY revenue growth, despite a 23% store growth, which was offset by weak same-store sales growth for both KFC (-5%) and Pizza Hut (-13%) along with the devaluation of Nigerian Naira. KFC revenue grew 14% YoY, while Pizza Hut revenue contracted 2% despite a 17% store growth. Growth metrics have slowed down; a similar trend was witnessed across most quick service restaurant peers. Gross margin trend was positive across brands due to benign raw material basket. However, unit economics was adversely impacted by weak growth metrics. KFC with superior unit economics displayed resilience; its restaurant operations manager declined 70 basis points YoY to 19% (19.4% in Q2 FY24). However, PH ROM declined 800 basis points to 6.1% (7.7% in Q2 FY24)..Devyani International's consolidated restaurant Ebitda contracted 11% YoY to Rs 1.3 billion, with a margin dip of 290 bp YoY to 15.4% (flat sequentially). Pre India-AS Ebitda declined 33% YoY to Rs 787 million and margin declined 550 bp YoY to 9.3% (11.5% in Q2). profit before tax declined 87% YoY to Rs 97 million with PBT margin at 1% versus. 9% in Q3 FY23 and 4% Q2 FY24. The QSR industry continues to see weak unit economics, across dine-in and delivery formats. Despite these industry-wide difficulties, KFC has shown resilience in managing the crisis effectively. On the other hand, PH has been struggling, partly attributed to intense competition in the market. Store expansion plans remain buoyant for Devyani despite near-term industry challenges. The overall guidance of reaching 2,000 stores by FY24 remains on track. We maintain a cautious stance due to the ongoing demand challenges in the near term. The recent correction in the stock partially covers up the near-term pressure. We reiterate our 'Buy' rating on the stock with a target price of Rs 195..Click on the attachment to read the full report:.DISCLAIMERThis report is authored by an external party. NDTV Profit 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 NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Devyani International Q3 Results Review - Weak Same-Store Sales Growth Drags Profitability: Motilal Oswal

Slow sales growth; miss on margin.

NDTV Profit

NDTV Profit

Follow Us

DOWNLOAD THE APP