Devyani International shares soar 8% on Jefferies buy upgrade, Rs 145 target unchanged

Shares of Devyani International jumped as much as 7.8% to Rs 132.88 on Thursday following an upgrade by Jefferies to a “Buy” rating from Hold, citing a 17% correction from recent peaks and maintaining a target price of Rs 145, which implies 25% upside potential.

Devyani announced the promotion of Manish Dawar from CFO to CEO, effective April 2026. According to Jefferies, this move ensures leadership continuity while allowing the new CEO to reassess the business and steer the franchise toward sustainable growth. Chairman Yadav noted that Pizza Hut’s turnaround is underway and highlighted that January 2026 started positively across all brands except Pizza Hut.

The company’s merger with Sapphire may introduce short-term uncertainty, but analysts view the move as a long-term positive for Devyani.


Devyani International Q3 Performance Highlights:

Devyani reported that consolidated and India revenues grew over 10% year-over-year (YoY), slightly below Jefferies’ expectations. Same-store sales growth (SSSG) showed mixed trends: KFC India improved sequentially but remained negative at -2.9%, while Pizza Hut India declined sharply by -9.1%.

Consolidated EBITDA grew 3% YoY, exceeding estimates, and pre-exceptional PAT also came in ahead of forecasts. Consolidated gross margin expanded by 20 basis points YoY, with EBITDA margins at 16%, above expectations. Brand Contribution (BC) margins contracted 40bps YoY to 13.9%. In India, BC margins fell over 80bps YoY to 13.1%, whereas international BC margins rose 50bps YoY to 17.1%.

During Q3, the company added 95 net new stores, comprising 75 in India and 20 internationally. In India, this included 54 new KFC stores, 18 Pizza Hut outlets, and 17 stores for its own brands—Vaango, BBK, and Goila. The company also closed 13 underperforming franchise stores, including Costa, NYF, Tealife, and Sanook. As of December 2025, total store count reached 2,279.

Brand Performance

KFC: Average daily sales (ADS) improved quarter-on-quarter (QoQ) to ₹90,000 but declined YoY. Revenue grew 6% YoY, with dine-in share dropping to 55% (though up QoQ) and delivery rising 13% YoY. Gross margin increased 115bps YoY to 69.8%, driven by cost efficiencies and lower input taxes. BC margin fell 40bps YoY to 16.8% but improved 2.5 percentage points YoY.

Pizza Hut: SSSG weakened further to -9.1%, marking one of its weakest quarters. Revenue declined 6% YoY, impacted by a 10% drop in delivery and 2% in dine-in. While gross margin slightly improved QoQ, BC margin fell 130bps YoY.

Other Brands: Franchised brands recorded 9% revenue growth with margin improvement. The international business grew 10% YoY, with improved profitability. BBK achieved EBITDA break-even ahead of management expectations.

Management Transition and Outlook

Current CEO Virag Joshi will retire on 31 March 2026 but will continue as a Non-Executive Director. Manish Dawar, currently CFO, will assume the role of CEO from 1 April 2026.

Looking ahead, management reported positive same-store sales trends across most brands in January 2026, except Pizza Hut. The company plans to close loss-making Pizza Hut stores, with no net additions in CY26, keeping the total store count largely stable.

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