Devyani International Shares Stage Impressive 15% Rebound Amid Leadership Transition
Shares of Devyani International Ltd have staged a remarkable recovery, surging approximately 15% over the past two trading sessions. This sharp rebound comes despite the stock remaining down by roughly 10% since the beginning of 2026, indicating renewed investor confidence in the company's strategic direction.
Leadership Continuity and Quarterly Performance Boost Investor Sentiment
Investors have warmly welcomed the company's December-quarter (Q3FY26) financial results along with clarity on leadership succession. Manish Dawar is set to be elevated as president and chief executive officer effective from 1 April 2026, ensuring continuity at the highest level of management. This leadership transition appears to have provided the market with much-needed stability and forward-looking assurance.
Devyani International reported impressive Q3 revenue growth of 11.3% year-on-year, reaching ₹1,441 crore. The company's operational efficiency was evident with its Ebitda margin standing at a healthy 15.7%. Furthermore, the store network continued its expansion trajectory, with the total count across India and international markets rising by 11.8% to reach 2,279 outlets.
Own Brands Portfolio Emerges as Star Performer
The standout growth driver during this quarter was not the company's established brands like KFC or Pizza Hut, but rather its own brands portfolio. This segment includes popular names such as Vaango, Biryani By Kilo, and Goila Butter Chicken, which collectively contributed 7% of total Q3 revenue. This represents a significant jump from just 2% a year ago, with revenue skyrocketing to ₹94 crore from ₹20 crore.
Notably, the own brands accounted for nearly half of Devyani's incremental revenue growth in the third quarter. The store count in this segment expanded dramatically to 218 from just 96 stores last year. Particularly encouraging was the achievement of Ebitda breakeven by Biryani By Kilo, indicating improving unit economics. For long-term investors, this portfolio represents valuable optionality - currently small in scale but possessing substantial potential to become more meaningful over time.
Challenges Persist in Core Brands Segment
Despite the positive developments, the company's core brands in India continue to face significant pressure. Same-store sales growth (SSSG) remains negative across key segments, with KFC India recording -2.9% and Pizza Hut India showing a concerning -9.1%. This persistent weakness raises legitimate concerns, as sustainable long-term growth ultimately depends on higher footfalls and increased spending at existing stores.
The company's forward growth strategy appears to hinge on two critical levers. The first involves continued scaling of the own brands portfolio, driven by strategic store additions and improving unit economics. The second requires a meaningful revival in SSSG at KFC and Pizza Hut, which still form the backbone of Devyani's revenue base. Management has indicated concrete plans to address underperforming Pizza Hut stores and sharpen operational efficiencies, though any substantial turnaround may require considerable time.
Intensifying Competition and Strategic Merger Prospects
The competitive landscape for organized quick-service restaurant chains is becoming increasingly intense. Legacy brands such as KFC and Pizza Hut may be losing some of their earlier market appeal, in what appears to be a structural rather than cyclical shift. The fundamental challenge extends beyond one soft quarter to sustaining relevance in an increasingly crowded market over the next decade.
Investors will be closely monitoring progress on the proposed merger with Sapphire Foods. Analysts at Jefferies India have expressed optimism about this development, stating, "The announced merger with Sapphire may involve short-term uncertainty but we view it as a long-term positive." Following the stock's decline from recent highs, Jefferies has upgraded Devyani International to a 'Buy' rating, reflecting confidence in the company's strategic initiatives and growth potential.
