DEVYANI - Devyani International Limited Share Price

During the earnings call on February 4, 2026, Devyani International management provided an optimistic outlook, highlighting a strong momentum in both its domestic and international operations. The company reported consolidated revenues of INR 1,441 crore for Q3 FY26, reflecting an 11.3% year-on-year growth. Specifically, Indian operations grew by 12.1%, contributing INR 978 crore to revenues, with gross margins at 71%.

Key forward-looking points from the management include:

1. Store Expansion: The company has accelerated new store openings, adding 54 KFC outlets and 18 Pizza Hut stores during the quarter, totaling 2,279 stores overall. Notably, management indicated plans for no net new Pizza Hut units in 2026 to focus on turnaround efforts by closing loss-making stores.

2. Merger with Sapphire Foods: Management announced a proposed merger expected to create one of India's largest diversified food and beverage platforms, with over 3,000 stores globally and projected synergies of approximately INR 210 crore to INR 225 crore annually. This strategic move is aimed at strengthening growth foundations in India.

3. Innovative Product Launches: New product ranges like the 'Dunked Range' in KFC and 'Crafted Flatzz' pizzas have received positive initial responses, indicating a focus on innovation to drive customer engagement.

4. Leadership Transition: Manish Dawar will assume the role of President and CEO from April 1, 2026, succeeding Virag Joshi, which brings continuity and experienced leadership as the company navigates through its growth phase and merger.

5. Operational Improvements: The company sees early signs of consumption recovery in the economy, which, alongside operational reforms and a leaner structure, positions Devyani for robust growth ahead.

Overall, the management expressed confidence in building a future-ready business, leveraging operational strengths and strategic initiatives to capture market opportunities.

Here are the major questions asked during the Q&A section of the earnings transcript and their detailed answers:

Question 1: Devanshu Bansal: "Just Manish, starting off, still there is some time for the CEO hat, but you have been in the system for quite some time. Checking if you would like to share some initial thoughts on your key focus areas for ramping up the next phase of the growth journey for Devyani?"

Answer 1: "My key priority areas will focus on improving our same-store sales growth (SSSG) and average daily sales (ADS). This will require developing new initiatives and creating an enabling environment for growth. While it's too early for strategic details, we aim to build a capable leadership team and incorporate a stronger technology focus to catch up with peers."

Question 2: Jaykumar Doshi: "First one is on this EBITDA growth or absolute EBITDA pre-IndAS of INR 124 crore. Do you think that even in a weak environment, similar EBITDA margin or absolute EBITDA adjusted for seasonality, you should be comfortable maintaining and should we expect improvement over the coming quarters?"

Answer 2: "We've managed a turnaround in Biryani by Kilo to breakeven, which has supported our EBITDA figures. While past negative SSSG affected us, I believe the improvements in our KFC operations and the performance of Nepal and Nigeria can help us maintain current EBITDA levels. We foresee better times ahead."

Question 3: Jaykumar Doshi: "Can you give us some indication of what could be the impact of cannibalization on SSSG of KFC? And is there any thought internally to perhaps slow down store addition for KFC for a year or so and try and improve SSSG and profitability of that business?"

Answer 3: "Opening stores rapidly has led to some cannibalization. Given that competitors have a much larger footprint, we will reevaluate our strategies, focusing on online and offline differentiation. While KFC remains vital for growth, we need to refine our approach to drive better SSSG and profitability."

Question 4: Tejash Shah: "What would you prioritize - fixing or ramping up KFC first or fixing Pizza Hut as a model first? And then you have a lot of long tail of other projects as well?"

Answer 4: "We are addressing structural issues caused by operating as a fragmented entity. This merger will streamline decision-making, enhance technology access, and improve our operations. My focus will be on strengthening our overall tech leadership and operational efficiency, which should benefit both brands."

Question 5: Saaksha Mantoo: "Just wanted to get a sense on how far do we have to go in terms of shutting these loss-making stores? How many stores are there, and what is not working for us in these stores?"

Answer 5: "We will tackle Pizza Hut from various fronts by shutting down underperforming stores and enhancing our technology and marketing. It may take a couple of years to stabilize, but initial steps have begun, and we'll develop a comprehensive strategy post-merger approval."

Question 6: Percy Panthaki: "For FY27, what is the minimum SSSG that you need to deliver so that you can have pre-Ind AS EBITDA margin expansion?"

Answer 6: "I cannot provide specific FY27 guidance, but given our strong brand contribution margins despite challenges, I am confident we can optimize our EBITDA. We still have levers that can help us manage costs while SSSG continues being a crucial performance indicator."

Question 7: Amit Sachdeva: "Could you give us a little bit of detail on what initiatives are working well that have driven improvements?"

Answer 7: "While I can't disclose specific details, we've implemented diverse promotional activities and improved our online-offline strategy mix. The right adjustments in our offerings have given positive results in certain markets, setting the foundation for broader initiatives moving forward."

If you need further details or clarifications on these questions and answers, feel free to ask!