Devyani International Limited , a major player in the Quick Service Restaurant (QSR) sector, has reported a 13% year-on-year growth in consolidated revenue for Q2 FY26, reaching INR 1,377.00 crore. The company faced headwinds from unseasonable rains and the timing of religious festivals but continued its expansion strategy across brands.

Key Financial Highlights

Brand Performance

KFC India

• Revenue: INR 572.00 crore (+5.30% YoY)
• Average Daily Sales: INR 89,000.00
• Brand Contribution Margin: 14.10%
• Added 30 new stores, reaching a total of 734 stores

Pizza Hut India

• Revenue: INR 186.00 crore
• Same-Store Sales Growth: -4.00%
• Average Daily Sales: INR 33,000.00
• Opened 3 new stores, totaling 621 stores

International Business

• Revenue: INR 450.00 crore (+14.00% YoY)
• Brand Contribution: INR 75.00 crore (16.70% margin)

Expansion and New Initiatives

Devyani International continued its expansion strategy across various brands:

• KFC: Added 30 new stores in India
• Pizza Hut: Opened 3 new stores
• Tealive: Test launched with 6 new outlets
• Biryani By Kilo: Expanded to airport locations in Mumbai and Pune

The company remains on track to achieve brand contribution breakeven for its SkyGate acquisition by March 2026.

Market Challenges and Strategy

Manish Dawar, CFO and Whole-Time Director, highlighted the challenges faced during the quarter:

"We had this peculiar situation whereby Dussehra and the Navaratri came in the same quarter, which was unlike the previous year. And therefore, we saw a kind of prolonged dip in the SSSG (Same-Store Sales Growth)."

The company increased promotional activities to support sales during this period, particularly focusing on value offerings. Dawar noted, "We are working on innovation in that segment as well. You would have seen the promotions around the whole Epic Savers campaign where we are promoting the value layer."

Outlook

While the demand environment remains challenging, Devyani International is optimistic about the upcoming quarter, typically a strong period for the QSR industry. The company is balancing its efforts between maintaining dine-in relevance and catering to the growing delivery segment.

Dawar commented on future prospects, stating, "We've seen some difference post Dussehra. Let's see whether it sustains the momentum or not. But overall, let's say, if you were to ask me what is the one-word conclusion, it remains muted."

As Devyani International navigates through these market challenges, it continues to focus on store expansion, menu innovation, and operational efficiency to drive growth in the competitive QSR landscape.

Devyani International , a prominent player in the Indian food and beverage industry, has released its financial results for the second quarter, revealing a mixed performance with notable revenue growth but facing profitability headwinds.

Revenue Growth

Devyani International reported a robust increase in its Q2 revenue, which rose to ₹13.8 billion, up from ₹12.2 billion in the corresponding quarter of the previous year. This represents a year-over-year growth of approximately 13.1%, indicating the company's ability to drive sales despite challenging market conditions.

Profitability Concerns

Despite the revenue growth, the company faced significant challenges in maintaining profitability:

The company swung from a modest profit of ₹2.00 million in the previous year's Q2 to a substantial consolidated net loss of ₹220.00 million in the current quarter. This significant shift in profitability may raise concerns among investors about the company's cost management and operational efficiency.

EBITDA Performance

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) saw a slight decline:

• Current Q2 EBITDA: ₹1,920.00 million
• Previous Q2 EBITDA: ₹1,950.00 million

The EBITDA margin compressed from 16.01% to 13.97%, a decrease of 204 basis points year-over-year. This compression in margins suggests that the company might be facing challenges in managing its operating costs effectively, despite the growth in revenue.

Analysis

The contrasting performance in revenue and profitability indicates that Devyani International might be prioritizing market share and top-line growth, possibly at the expense of short-term profitability. The company may be investing in expansion or facing increased input costs, which could be impacting its bottom line.

Investors and analysts may look for further clarification from the company management on:

1. Factors contributing to the revenue growth
2. Reasons behind the significant swing to net loss
3. Strategies to improve profitability while maintaining growth momentum
4. Outlook for the coming quarters and any measures planned to address margin pressures

As the food and beverage industry continues to evolve, Devyani International's ability to balance growth with profitability will be crucial for its long-term success and investor confidence.