Devyani International Ltd Quarterly Results Q4 FY 25 stock analysis

Home » Core Investor Group » Devyani International Ltd – Q4FY25 Result Update

Sector Outlook: Positive

Near-term outlook remains challenging due to subdued demand

In Q4FY25, Devyani International Limited reported consolidated revenue of Rs. 12,126 million, down 6.3% QoQ / up 15.8% YoY The demand scenario continued to remain subdued in Q4FY25, but revival in demand is expected, led by the budget stimulus announcement. KFC reported revenue of Rs. 5,109 million a growth of 3.4% YoY, but SSSG declined by 6.1% due to an outbreak of bird flu in Andhra Pradesh and Telangana, with ADS dropping by 10.8% YoY to Rs. 83,000/-, though the brand continued its expansion by adding seven new stores this quarter, bringing the total store count to 696, underscoring its commitment to long-term growth. Pizza Hut registered revenue of Rs. 1,754 million, a growth of 8.2% YoY and SSSG was marginally up by 1%, with a decline in ADS of 3.1% YoY to Rs. 31,000/-, due to weak consumer demand and intense competition. The management closed 14 stores during Q4 FY25, bringing the store count to 630, and guided that future store expansion will be subject to improvements in SSSG and ADS. Costa Coffee’s performance improved with a 16% YoY revenue growth to Rs. 523 million, achieving a 3.5% increase in SSSG but the ADS was impacted by 18.2% YoY to Rs. 27,000/-. Costa Coffee added 11 stores in Q4FY25, bringing the total count to 220. Internationally, the company’s revenue grew by 41.7% YoY to Rs. 4,195 million. The company added one KFC store in Thailand. The company’s gross margin stood at 68.5%, down 19 bps QoQ / down 68 bps YoY, due to food inflation. The EBITDA was Rs. 1,860 million, with an EBITDA margin of 15.3%, contracting sequentially due to lower operating leverage. The company registered a loss of Rs. 168 million in Q4FY25. The company continues to expand its offering and plans to acquire a controlling stake in Sky Gate Hospitality (Biryani By Kilo and other brands) for a consideration of Rs. 4,190 million through preferential allotment.

Key Concall Highlights

The overall FMCG demand remained steady, with strong consumer traction across multiple categories. Rural consumption continued to surpass urban demand, primarily driven by smaller unit packs, and the premiumization trend persisted across regions, reflecting a growing preference for value-added products.
Digital commerce continues to expand—Q-com drives instant, small basket demand in metros, while marketplaces deepen reach in smaller towns with rising adoption and premium preferences.
Despite concerns over volatile edible oil prices, the decline in food inflation has helped reduce overall inflation, while gross margin has remained stable with a slight upward trend year-on-year and sequentially, supported by effective hedging strategies, a favorable product mix, well-calibrated price adjustments, strategic supply chain enhancements, and digital marketing investments that drive operational efficiencies and foster growth across key channels.
Zydus’ strategy focuses on growing brands through digital marketing, e-commerce activations, and consumer engagement.
The company’s acquisition of Natural India Private Limited (NIPL) is progressing smoothly, with strong product growth and well-aligned strategic initiatives.
The company is looking at acquisitions that can help expand its base outside India, specifically in regions such as Sub-Saharan Africa, Nigeria, GCC, South Asia, or Southeast Asia.
Management is confident in its strategy to drive sustainable long-term growth through innovation and adapting to changing consumer preferences. With a long-term margin target of 17-18%, the company focuses on improving gross margins and enhancing operational efficiency to sustain double-digit top-line growth.

Valuation and Outlook

Devyani International Limited (DIL), a leading QSR in India with brands like KFC, Pizza Hut and Costa Coffee, reported a healthy revenue growth of 15.8% YoY in Q4FY25, despite a subdued demand environment that is expected to persist in the near term. However, the company remains optimistic about a revival, driven by budget stimulus and tax relief measures announced in the recent Union budget. Despite a challenging demand environment, the company continued its store expansion plans, strengthening its market presence. Recently, the company plans to enter the high-growth potential Indian cuisine market by acquiring Sky Gate Hospitality brands, including Biryani By Kilo, Goila Butter Chicken, and The Bhojan, which comprise over 100 stores across more than 40 cities. This acquisition is expected to boost the company’s revenue growth. Looking ahead, the company focuses on strengthening core and emerging brands, improving ADS, cost optimization, and marketing efficiency, which will help improve the company’s profitability. Additionally, the company focuses on innovation and better customer engagement through value-driven offerings. Furthermore, management is optimistic about the boost in consumption resulting from the tax relief announced in the recent Union Budget. Although the near-term outlook remains challenging due to subdued demand, rising competition and Pizza Hut’s premium positioning weighing on its profitability, strategic initiatives such as partnerships and entry into high-growth potential markets position the company for long-term growth.