KFC, Pizza Hut operator stock slips 3% after muted Q2 results; details here

Devyani International shares fell 3 per cent after the company reported muted second-quarter earnings for the second quarter

Shares of Devyani International fell nearly 3 per cent on Friday as analysts cut earnings expectations after the company reported a muted second quarter earnings for the second quarter of the current financial year. 

 

The operator of KFC and Pizza Hut's stock fell as much as 2.9 per cent during the day to ₹151.15 per share, the biggest intraday fall since October 31 this year. The Devyani International stock pared losses to trade 2.5 per cent lower at ₹151.7 apiece, compared to a 0.66 per cent decline in Nifty 50 as of 9:55 AM. 

 

Shares of the company fell for the fifth straight session, falling 10 per cent in the process, and currently trade at 1.8 times the average 30-day trading volume, according to Bloomberg. The counter has risen 17 per cent this year, compared to a 7.1 per cent advance in the benchmark Nifty 50. Devyani International has a total market capitalisation of ₹18,727.33 crore. 

Devyani International Q2 results 

Devyani International, the franchisee of US-based Yum Brands, reported a net loss of ₹21.9 crore for the quarter ended September, compared with a profit of ₹1.7 lakh in the same period last year. Revenue from operations rose 12.6 per cent to ₹1,377 crore, driven by the addition of 263 new stores, taking the total count to 2,184.

 

Same-store sales declined 4.2 per cent at KFC and 4.1 per cent at Pizza Hut. Ebitda margin narrowed to 14.1 per cent in the second quarter from 16.3 per cent a year earlier.

 

The company noted that the recent goods and services tax cuts by the Indian government had "a very minimal" impact on the quick-service restaurant segment.  ALSO READ | Infosys fixes November 14 as record date for ₹18,000-crore buyback; details

Analysts on Devyani International earnings

Devyani International’s second-quarter FY26 performance came in below expectations, according to Antique Stock Broking. The brokerage noted that the company is focusing on maintaining dine-in saliency, which remains a more profitable channel. Management indicated that while promotional offers have boosted value consumption, demand tends to drop once such promotions are withdrawn.

 

Antique Stock Broking cut its pre-Ind AS Ebitda estimates for FY26-FY28 by 7-17 per cent, citing weak demand and continued pressure on profitability. It maintained a ‘Hold’ rating on the stock with a revised target price of ₹142, down from ₹171 earlier.

 

Profitability at both KFC and Pizza Hut was impacted by higher value offerings and increased promotional spending, which weighed on brand contributions despite cost controls, according to Nuvama Institutional Equities.

 

Factoring in the weak operating metrics and a muted start to the third quarter of FY26, Nuvama trimmed its revenue and Ebitda estimates for FY26 by 2.3 per cent and 5.3 per cent, respectively, and for FY27 by 2.7 per cent and 4 per cent.