Both Bernstein and Citi remain positive on Devyani International, citing strong store expansion and improving revenue trends.
Bernstein, which has an ‘Outperform’ rating with a target of ₹220 per share, noted that Q3 saw a visible recovery in Devyani’s core business, with surprise upside in store additions. The company added 101 stores in India, while its international business also saw sequential improvement.
However, same-store sales growth (SSSG) for KFC India was weaker than expected, even as Pizza Hut showed signs of recovery, and brands like Costa Coffee and Vaango continued their positive trajectory. Bernstein also pointed out that gross margins declined both QoQ and YoY, but higher SSSG contributed to a better brand contribution of 14.3% vs. 13.6% in Q2FY25.
Similarly, Citi, which has a ‘Buy’ rating with a target of ₹210 per share, noted that Devyani’s revenue and EBITDA growth exceeded expectations, driven in part by the impact of the Thailand acquisition.
However, the India business remained subdued due to weak discretionary demand. While ads per store remained flat for both KFC and Pizza Hut, Q4 is expected to see a stronger store expansion push, particularly for Pizza Hut, owing to DA commitments. Management, however, signaled that store expansion will moderate going forward, which could improve margins.
Both brokerages remain optimistic about Devyani’s long-term potential, especially with the launch of three new brands from Q1FY26 onwards.
