Buy Devyani International; target of Rs 155: Motilal Oswal

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Devyani International's KFC business is expected to drive growth, with a focus on value-led offerings and calibrated promotions.
  • The proposed merger with Sapphire is anticipated to unlock scale benefits, improve unit economics, and enhance execution across brands.
  • Own brands like Biryani By Kilo and Vaango are showing promising growth, with SSSG of 8.1% and 6.9%, respectively.
  • International business is growing, with revenue up 13% YoY, driven by brand contribution and margin expansion.

Thesis Validation Checklist

  • Monitor KFC's SSSG and ADS growth, as well as the success of value-led offerings and promotions.
  • Track the progress of the Sapphire merger and the realization of anticipated synergies.
  • Keep an eye on the growth of own brands and their contribution margins.
  • Watch for improvements in Pizza Hut's performance, particularly in terms of SSSG and brand contribution margin.