Devyani International Limited (DIL), one of India's largest multi-dimensional Quick Service Restaurant (QSR) operators, has reported significant expansion and acquisition activities. The company has expanded its footprint to 2,145 stores and completed the acquisition of Sky Gate Hospitality, marking a strategic move into the biryani and Indian cuisine segment.

Store Expansion and Acquisition

DIL added 106 new stores, bringing its total store count to 2,145. This expansion includes the integration of 105 stores from Sky Gate Hospitality, which DIL acquired. The acquisition of Sky Gate Hospitality, which operates the "Biryani by Kilo" and "Goila Butter Chicken" brands, gives DIL access to market-leading brands in the biryani and Indian cuisine segment, one of the largest food categories in the country.

Financial Performance

DIL reported consolidated revenues of ₹1,357.00 crore, representing an 11.1% year-over-year growth. This growth was driven by strong performance from KFC, Costa Coffee, and the Food Court business in India, supported by an 11.2% year-over-year growth in the international business.

The company's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) stood at ₹205.00 crore, with EBITDA margins at 15.1%. The slight dip in margins was attributed to deleverage from lower Average Daily Sales (ADS) year-over-year and investments in marketing and promotions.

Brand-wise Performance

Sky Gate Acquisition Details

DIL has increased its stake in Sky Gate Hospitality to approximately 86.13% through additional investments. The company invested about ₹103.00 crore in Sky Gate, executing the acquisition through a preferential issue of equity shares. As of June 30, DIL's equity stake in Sky Gate stood at approximately 84.34% on a fully diluted basis.

Management Commentary

Ravi Jaipuria, Non-Executive Chairman of Devyani International Limited, commented on the company's performance: "India's QSR industry is on a structural growth trajectory – underpinned by rising urbanization, growing income levels, increasing digital adoption, increase in female work participation rate and a growing appetite for convenience especially among younger consumers."

He added, "As one of the leading QSR players, we are well positioned to benefit from the rebound in consumer spending. Our multi-cuisine, multi-format strategy caters to a broad spectrum of consumer tastes, occasions, and price points, while diversifying away from any category or geography specific risks."

Future Outlook

Despite near-term macro factors leading to soft consumer demand, DIL remains optimistic about the industry's outlook. The company plans to continue executing its long-term growth agenda, focusing on scaling profitably, strengthening both core and emerging brands, and creating long-term value for all stakeholders.

Devyani International Limited operates more than 2,000 stores across over 280 cities in India, Nigeria, Nepal, and Thailand. As the largest franchisee of Yum Brands in India, DIL manages popular brands such as KFC, Pizza Hut, Costa Coffee, and now adds "Biryani by Kilo" and "Goila Butter Chicken" to its portfolio through the Sky Gate acquisition.

Devyani International Limited , a prominent player in the food and beverage industry, has reported mixed financial results for the quarter ended June 30, along with a significant acquisition.

Financial Performance

On a consolidated basis, Devyani International reported revenue from operations of INR 49,510.52 million for the quarter. The company's net profit stood at INR 167.63 million. On a standalone basis, the company achieved a revenue of INR 9,168.88 million and a profit of INR 62.06 million.

Key Financial Highlights

Major Acquisition

In a significant move, Devyani International completed the acquisition of an 80.72% equity stake in Sky Gate Hospitality Private Limited on June 10. The acquisition was valued at INR 4,196.00 million and was executed through preferential equity shares. Following the initial purchase, the company's stake in Sky Gate increased to 84.34% and subsequently to 86.13% on a fully diluted basis.

Employee Stock Options

During the quarter, the company allotted 1,952,500 equity shares to employees under the Employee Stock Option Scheme 2021, demonstrating its commitment to employee incentivization.

Audit Opinion

The financial results received unmodified opinions from the company's joint statutory auditors, Walker Chandiok & Co LLP and O P Bagla & Co LLP, providing assurance on the accuracy of the reported figures.

Analysis

While Devyani International has shown substantial revenue, the relatively modest net profit figures suggest potential challenges in maintaining profitability. The acquisition of Sky Gate Hospitality Private Limited represents a significant strategic move that could impact the company's future performance and market position.

Investors and analysts will likely be keen to observe how Devyani International integrates this major acquisition and leverages it for future growth, as well as how it manages its operational efficiency to improve profitability in the coming quarters.