Devyani International , a major player in India's Quick Service Restaurant (QSR) sector, has announced a significant expansion of its portfolio through the acquisition of a controlling stake in Sky Gate Hospitality Private Limited. The deal, valued at approximately ₹419.60 crore, will see DIL acquire up to 80.72% equity stake in Sky Gate, the company behind popular food brands such as 'Biryani By Kilo', 'Goila Butter Chicken', and 'The Bhojan'.

Strategic Acquisition Details

The Board of Directors of Devyani International approved the acquisition on April 24, 2025. The transaction involves the following key points:

• DIL will acquire up to 80.72% equity stake in Sky Gate Hospitality Private Limited on a fully diluted basis.
• The total consideration for the acquisition is approximately ₹419.60 crore.
• The deal will be primarily financed through a share swap, with a small portion paid in cash for taxes and adjustments.
• DIL will issue 2,37,19,187 new equity shares at ₹176.78 per share to the sellers of Sky Gate.

Expanding Brand Portfolio

This strategic move significantly enhances DIL's presence in the Indian cuisine segment. Sky Gate operates over 100 outlets across 40+ cities in India, including both dine-in restaurants and cloud kitchens. The acquisition brings three strong brands under DIL's umbrella:

1. Biryani By Kilo: Known for its freshly dum-cooked biryanis
2. Goila Butter Chicken: Offers a unique take on the classic butter chicken
3. The Bhojan: Provides a variety of pure vegetarian meals and snacks

Financial Implications

The acquisition implies an equity value of approximately ₹519.00 crore for Sky Gate (excluding certain brands that will be divested). Sky Gate's consolidated turnover for the financial year ended March 31, 2025, was around ₹277.00 crore, indicating the significant market presence of its brands.

Management Statements

Mr. Ravi Jaipuria, Non-Executive Chairman of DIL, commented on the acquisition: "We are truly delighted to enrich our portfolio of brands with the addition of India's favorite food category - The biryani. This partnership addresses our need to add traditional and authentic flavors of much-loved Indian food to our portfolio."

Market Impact and Future Prospects

This acquisition is expected to strengthen DIL's position in the competitive QSR market in India. By adding Sky Gate's brands to its existing portfolio, which includes international franchises like KFC, Pizza Hut, and Costa Coffee, DIL is poised to offer a more diverse range of cuisine options to Indian consumers.

The deal is subject to shareholder approval, which will be sought at an Extraordinary General Meeting scheduled for May 17, 2025. Upon completion, Sky Gate will become a subsidiary of Devyani International, marking a significant milestone in DIL's growth strategy in the Indian food and beverage sector.

As the QSR industry continues to evolve, this acquisition positions Devyani International to capitalize on the growing demand for both international and authentic Indian cuisines in the country's rapidly expanding food delivery and dine-in markets.

Devyani International , the operator of popular fast-food chains like KFC and Pizza Hut in India, is poised to make a significant move in the food and beverage industry. The company has announced plans to acquire a controlling stake in Sky Gate Hospitality, which operates the well-known Biryani by Kilo brand.

Board Meeting Scheduled

The board of directors of Devyani International is set to meet on April 24 to consider this strategic acquisition. During this meeting, they will also discuss the potential issuance of equity shares, likely related to the funding of this acquisition.

Expanding into the Biryani Market

This move marks Devyani International's entry into the lucrative biryani market, diversifying its portfolio beyond western fast-food chains. Biryani by Kilo has established itself as a prominent player in the biryani segment, known for its authentic flavors and wide reach across India.

Positive Analyst Outlook

The news of this potential acquisition has been well-received by market analysts. Many have upgraded their outlook on Devyani International's stock, citing several factors:

• Value Creation: Analysts believe that this acquisition could create significant value for Devyani International shareholders.
• Growth Opportunities: The biryani market in India is substantial and growing, offering Devyani International new avenues for expansion.
• Synergies: The acquisition could lead to operational synergies between Devyani's existing business and Biryani by Kilo.

Strategic Implications

This move by Devyani International reflects the company's strategy to:

• Diversify its food offerings
• Tap into the popular and growing Indian cuisine segment
• Expand its market presence beyond western fast-food chains

The acquisition of Biryani by Kilo, if approved, could potentially strengthen Devyani International's position in the Indian food service industry, combining the company's expertise in managing international brands with a strong domestic food concept.

As the board meeting approaches, investors and industry observers will be keenly watching for the final decision and the terms of the potential acquisition. The outcome could have significant implications for Devyani International's future growth trajectory and market position in India's competitive food service landscape.