Devyani International surges 25% in 4 days on robust Q2 results

In Q2FY22, the company posted consolidated profit after tax of Rs 46.6 crore as against a net loss of Rs 65.5 crore in Q2FY21.

Shares of Devyani International hit a new high of Rs 149 after they rallied 8 per cent on the BSE in Wednesday's intra-day trade on the back of heavy volumes. In the past four trading days, the stock of the quick service restaurant (QSR) company has surged 25 per cent after it reported a consolidated profit after tax (PAT) of Rs 46.6 crore in the September quarter of FY22. It had posted a net loss of Rs 65.5 crore in Q2FY21.

The stock was trading at highest level since its listing on August 16, 2021. With the past four days' rally, Devyani International is quoting at 66 per cent premium over the issue price of Rs 90 per share.

At 11:54 am, it was quoting 5.6 per cent higher at Rs 145.10, as compared to a 0.19 per cent rise in the S&P BSE Sensex. Trading volumes on the counter jumped over two-fold with a combined 19.51 million shares, representing 1.6 per cent of total equity of the company, having changed hands on the NSE and BSE.

In Q2FY22, the company's revenue from operations more-than-doubled or was up 124 per cent year- on-year (YoY) to Rs 516 crore, on strong business recovery post Covid second wave. Earnings before interest, tax, depreciation and amortization (ebitda) grew 175 per cent YoY at Rs 123 crore, and margins improved to 23.9 per cent from 19.49 per cent in Q2FY21.

The company opened 111 net new stores across core brands in the 6 months ended September 30, 2021, with 68 net new stores getting added in Q2FY22. The management said it has seen a great recovery on the demand side as the Covid 19 restrictions ease and the vaccination coverage improves.

Devyani International is the largest franchisee of Yum Brands in India and one of the top operators of chain quick-service restaurants (QSRs). It collaborates with Yum across various aspects of its operations for KFC and Pizza Hut for the franchisor’s brand protection and management including product innovation and development, brand strategy and technology initiatives. In addition, Devyani also has a franchisee for the Costa Coffee brand and stores in India.

Devyani is well placed to benefit from growing industry trends as it has a strong portfolio of highly recognized global brands which cater to a range of customer preferences. Its close association with Yum together with its technical, marketing and operational expertise has enabled them to establish itself as a comprehensive player in the QSR industry in India. It has a strong presence in key consumption markets, according to analysts.