Buy Devyani International, target price Rs 195.: JM Financial

JM Financial has buy call on Devyani International with a target price of Rs 195. The current market price of Devyani International is Rs 159.25.

Devyani International, incorporated in the year 1991, is a Small Cap company (having a market cap of Rs 19215.55 Crore) operating in Tourism & Hospitality sector.

Devyani International key Products/Revenue Segments include Food Products, Other Operating Revenue and Scrap for the year ending 31-Mar-2022.


Financials
For the quarter ended 31-12-2022, the company has reported a Consolidated Total Income of Rs 798.65 Crore, up 6.21 % from last quarter Total Income of Rs 751.94 Crore and up 27.11 % from last year same quarter Total Income of Rs 628.32 Crore. Company has reported net profit after tax of Rs 71.04 Crore in latest quarter.

The company’s top management includes Mr.Ravi Jaipuria, Mr.Pradeep Sardana, Dr.Ravi Gupta, Dr.Girish Kumar Ahuja, Dr.Naresh Trehan, Mr.Rashmi Dhariwal, Mr.Raj Pal Gandhi, Mr.Varun Jaipuria, Mr.Manish Dawar, Mr.Virag Joshi, Mr.Rahul Shinde, Mr.Prashant Purker. Company has APAS & Co. LLP as its auditors. As on 31-12-2022, the company has a total of 120 Crore shares outstanding.

Investment Rationale
The recent correction (25%+ decline from August ) owing to near term demand challenges makes its valuation palatable (25x FY25E Pre-IND AS EBITDA) and provides a good entry point as the brokerage believes intrinsic strengths of the business and market opportunity remain intact.

With estimated Sales/EBITDA (pre-IND AS) CAGR of 26/29% over FY23-25E, the brokerage expects Devyani to emerge as the fastest-growing player in our QSR coverage universe. Valuation premium to peers is justified.

Promoter/FII Holdings
Promoters held 62.8 per cent stake in the company as of 31-Dec-2022, while FIIs owned 8.82 per cent, DIIs 7.68 per cent.