Devyani International Ltd: India's QSR Giant at a Crossroads — A Deep Dive into the Numbers Behind KFC, Pizza Hut, and Costa Coffee

Published: June 1, 2026 | NiftyBrief Equity Research

Company Overview

Devyani International Ltd (NSE: DEVYANI, BSE: 543330) is India's largest franchisee of Yum Brands and among the biggest operators of chain quick service restaurants (QSR) in the country. The company operates iconic global brands — KFC, Pizza Hut, and Costa Coffee — across India, and also runs its own homegrown brand Vaango, a South Indian cuisine chain. As of FY2026, the company operates over 1,000+ stores spanning multiple formats and geographies across India.

The company is part of the RJ Corporation conglomerate, founded by Ravi Kant Jaipuria in 1991. RJ Corp is a multinational group with successful ventures spanning beverages (Varun Beverages), QSR, retail, ice cream (Cream Bell, Daima), healthcare (Medanta Africare), and education across 14+ countries. This deep institutional backing provides Devyani International with operational expertise and financial muscle that standalone QSR operators simply cannot match.

The stock trades at ₹114 per share (as of June 1, 2026), reflecting a market capitalization of ₹14,064 crore. The stock has seen a 52-week high of ₹191 and a 52-week low of ₹91.6, implying significant volatility and a current price that sits closer to the lower end of its trading range. The company's book value stands at ₹12.5 per share, while the stock trades at approximately 9.12x its book value, suggesting the market still prices in substantial future growth despite recent operational headwinds.

Financial Performance: Revenue Growth Amid Profitability Pressures

Revenue Trajectory

Devyani International has delivered impressive top-line growth over the past decade, transforming from a ₹1,012 crore revenue company in FY2016 to a ₹5,611 crore revenue behemoth in FY2026 — a compound annual growth rate of approximately 19% over 10 years. More impressively, the 5-year compounded sales growth stands at 38%, driven by aggressive store expansion, post-COVID recovery, and rising consumer spending on eating out.

Here is the detailed revenue trajectory:

• FY2016: ₹1,012 crore
• FY2017: ₹1,048 crore
• FY2018: ₹1,111 crore
• FY2019: ₹1,311 crore
• FY2020: ₹1,516 crore
• FY2021: ₹1,135 crore (COVID-impacted)
• FY2022: ₹2,084 crore (strong recovery)
• FY2023: ₹2,998 crore
• FY2024: ₹3,556 crore
• FY2025: ₹4,951 crore
• FY2026: ₹5,611 crore

The 3-year compounded sales growth stands at 23%, while TTM (trailing twelve months) growth is 13%, indicating a moderation in growth momentum as the base gets larger and same-store sales growth normalises.

Quarterly Revenue Momentum

The quarterly data reveals the granular story of growth:

• Mar 2023: ₹754.98 crore
• Jun 2023: ₹846.63 crore
• Sep 2023: ₹819.47 crore
• Dec 2023: ₹843.13 crore
• Mar 2024: ₹1,047.08 crore
• Jun 2024: ₹1,221.90 crore
• Sep 2024: ₹1,222.16 crore
• Dec 2024: ₹1,294.40 crore
• Mar 2025: ₹1,212.59 crore
• Jun 2025: ₹1,356.97 crore
• Sep 2025: ₹1,376.75 crore
• Dec 2025: ₹1,440.90 crore
• Mar 2026: ₹1,436.86 crore

The most recent quarter (Mar 2026) reported sales of ₹1,436.86 crore, reflecting 18.50% year-on-year quarterly sales growth. This is a healthy number for a company at Devyani's scale.

Operating Profitability: The Margin Story

Operating profit margins have been a mixed bag. The company peaked at 23% OPM in FY2022 but has since seen margins compress to 15% in FY2026:

• FY2016: -0% OPM
• FY2017: 4% OPM
• FY2018: 9% OPM
• FY2019: 16% OPM
• FY2020: 17% OPM
• FY2021: 17% OPM
• FY2022: 23% OPM
• FY2023: 22% OPM
• FY2024: 16% OPM
• FY2025: 17% OPM
• FY2026: 15% OPM

The operating profit in FY2026 was ₹849 crore on revenues of ₹5,611 crore, down marginally from ₹839 crore in FY2025 on revenues of ₹4,951 crore. The absolute operating profit has been broadly stable in the ₹800-850 crore range over the last two fiscal years, even as revenues grew — indicating that incremental revenue is coming at lower margins.

On a quarterly basis, operating margins have ranged from 13.95% to 16.03% in recent quarters:

• Mar 2025: 15.32% OPM, operating profit ₹185.77 crore
• Jun 2025: 15.17% OPM, operating profit ₹205.88 crore
• Sep 2025: 13.95% OPM, operating profit ₹192.11 crore
• Dec 2025: 16.03% OPM, operating profit ₹230.93 crore
• Mar 2026: 15.33% OPM, operating profit ₹220.30 crore

The Profitability Challenge

This is where the story gets more nuanced and, frankly, concerning. Despite growing revenues nearly 6x over a decade, Devyani International has struggled to deliver consistent net profits:

• FY2016: Net loss of ₹130 crore
• FY2017: Net loss of ₹180 crore
• FY2018: Net profit of ₹31 crore
• FY2019: Net loss of ₹94 crore
• FY2020: Net loss of ₹121 crore
• FY2021: Net loss of ₹63 crore
• FY2022: Net profit of ₹155 crore
• FY2023: Net profit of ₹263 crore
• FY2024: Net loss of ₹10 crore
• FY2025: Net loss of ₹7 crore
• FY2026: Net loss of ₹43 crore

The last three fiscal years have been loss-making, with the net loss widening to ₹43 crore in FY2026. This is despite revenues reaching all-time highs.

The quarterly breakdown is equally telling:

• Mar 2023: Net profit ₹59.88 crore
• Jun 2023: Net loss ₹1.59 crore
• Sep 2023: Net profit ₹35.82 crore
• Dec 2023: Net profit ₹5.07 crore
• Mar 2024: Net loss ₹48.96 crore
• Jun 2024: Net profit ₹22.43 crore
• Sep 2024: Net loss ₹4.92 crore
• Dec 2024: Net loss ₹7.64 crore
• Mar 2025: Net loss ₹16.77 crore
• Jun 2025: Net profit ₹2.23 crore
• Sep 2025: Net loss ₹23.95 crore
• Dec 2025: Net loss ₹10.98 crore
• Mar 2026: Net loss ₹9.84 crore

The most recent quarter (Mar 2026) saw a net loss of ₹9.84 crore, narrower than the ₹48.96 crore loss in Mar 2024 but still firmly in the red.

The Interest and Depreciation Drag

Two line items explain the gap between healthy operating profits and bottom-line losses: interest costs and depreciation.

Interest Expense

Interest costs have been rising relentlessly:

• FY2016: ₹43 crore
• FY2020: ₹161 crore
• FY2022: ₹129 crore
• FY2023: ₹149 crore
• FY2024: ₹189 crore
• FY2025: ₹267 crore
• FY2026: ₹276 crore

In FY2026, interest costs of ₹276 crore consumed approximately 33% of operating profit — a heavy burden. On a quarterly basis, interest has been trending between ₹66 crore and ₹70 crore:

• Jun 2025: ₹66.78 crore
• Sep 2025: ₹68.84 crore
• Dec 2025: ₹70.02 crore
• Mar 2026: ₹70.10 crore

Depreciation

Depreciation has accelerated even faster, reflecting the capital-intensive nature of store expansion:

• FY2016: ₹85 crore
• FY2020: ₹223 crore
• FY2022: ₹221 crore
• FY2023: ₹278 crore
• FY2024: ₹391 crore
• FY2025: ₹592 crore
• FY2026: ₹654 crore

In FY2026, depreciation of ₹654 crore was the single largest cost after raw materials, consuming 77% of operating profit. Combined, interest and depreciation totalled ₹930 crore against an operating profit of just ₹849 crore, leaving the company with a pre-tax loss of ₹57 crore.

The quarterly depreciation run-rate is escalating:

• Jun 2025: ₹149.68 crore
• Sep 2025: ₹155.18 crore
• Dec 2025: ₹166.65 crore
• Mar 2026: ₹182.48 crore

This escalating depreciation suggests continued heavy capital expenditure on new stores, which, if not matched by proportional revenue growth, will continue to pressure profitability.

Balance Sheet: Growth Funded by Debt

Asset Growth

Total assets have grown from ₹720 crore in FY2016 to ₹6,750 crore in FY2026 — nearly a 10x expansion in a decade. Fixed assets form the bulk, growing from ₹491 crore to ₹5,686 crore over the same period, reflecting the massive store expansion program.

Key balance sheet figures (FY2026):

• Equity Capital: ₹123 crore
• Reserves: ₹1,419 crore
• Borrowings: ₹3,833 crore
• Other Liabilities: ₹1,375 crore
• Total Liabilities: ₹6,750 crore
• Fixed Assets: ₹5,686 crore
• Other Assets: ₹1,054 crore

Debt Levels

Borrowings have been the primary growth fuel:

• FY2016: ₹348 crore
• FY2020: ₹1,832 crore
• FY2022: ₹1,254 crore
• FY2023: ₹1,565 crore
• FY2024: ₹2,906 crore
• FY2025: ₹3,188 crore
• FY2026: ₹3,833 crore

Borrowings have grown 11x from FY2016 levels. The debt-to-equity ratio stands at approximately 2.5x (₹3,833 crore borrowings vs ₹1,542 crore of equity + reserves), indicating a highly leveraged balance sheet. This leverage explains the persistent interest cost burden.

Capital Employed and Returns

The Return on Capital Employed (ROCE) has deteriorated:

• FY2017: -19%
• FY2018: 15%
• FY2019: 7%
• FY2020: 6%
• FY2021: 2%
• FY2022: 16%
• FY2023: 18%
• FY2024: 6%
• FY2025: 6%
• FY2026: 5%

Current ROCE stands at just 4.66%, well below the cost of capital. The Return on Equity (ROE) is -1.67%, meaning the company is actually destroying shareholder value. Over the last 3 years, average ROE has been -3.52%.

Cash Flow: A Silver Lining

Despite the bottom-line losses, the cash flow picture is notably better:

Operating Cash Flow

• FY2017: ₹90 crore
• FY2020: ₹301 crore
• FY2022: ₹451 crore
• FY2023: ₹637 crore
• FY2024: ₹766 crore
• FY2025: ₹900 crore
• FY2026: ₹919 crore

Operating cash flow has been consistently positive and growing, reaching ₹919 crore in FY2026. The CFO to Operating Profit ratio has been strong, averaging around 108-140%, indicating that reported operating profits are well-backed by actual cash generation.

Free Cash Flow

Free cash flow has turned strongly positive in recent years:

• FY2022: ₹158 crore
• FY2023: ₹213 crore
• FY2024: ₹305 crore
• FY2025: ₹418 crore
• FY2026: ₹478 crore

The ₹478 crore free cash flow in FY2026 is significant — it shows the business generates enough internal cash to partially fund its expansion. However, given that capital expenditure remains elevated (investing outflows of ₹440 crore in FY2026), the company still needs external financing to bridge the gap.

Net Cash Flow

• FY2024: ₹105 crore
• FY2025: ₹14 crore
• FY2026: ₹282 crore

The net cash position has improved to ₹282 crore in FY2026, the best in recent years, suggesting better treasury management.

Working Capital Efficiency

One area where Devyani International excels is working capital management. The company operates with a negative cash conversion cycle:

• FY2016: -77 days
• FY2020: -68 days
• FY2022: -64 days
• FY2023: -42 days
• FY2024: -79 days
• FY2025: -66 days
• FY2026: -89 days

A negative cash conversion cycle of -89 days in FY2026 means the company collects from customers well before it pays suppliers — a hallmark of a well-run QSR operation. Working capital days have also improved to -85 days in FY2026, indicating strong operational efficiency.

Inventory days have improved from 66 days in FY2021 to 34 days in FY2026, while debtor days remain a lean 4 days. Days payable stands at 127 days, reflecting the company's ability to negotiate favourable payment terms with suppliers.

Earnings Per Share Trajectory

The EPS trajectory tells the story of a company struggling to convert scale into shareholder earnings:

• FY2016: -₹11.98
• FY2017: -₹11.31
• FY2018: ₹4.33
• FY2019: -₹7.46
• FY2020: -₹11.46
• FY2021: -₹0.48
• FY2022: ₹1.30
• FY2023: ₹2.20
• FY2024: ₹0.39
• FY2025: ₹0.08
• FY2026: -₹0.31

The company has paid zero dividends throughout its listed history — not surprising given the losses, but still a consideration for income-seeking investors.

Shareholding Pattern: Declining FII Interest, Rising DII Confidence

The shareholding pattern reveals an interesting shift in institutional sentiment:

Key observations:

• Promoter holding has marginally decreased from 62.80% to 61.37% over four years — a minor reduction.
• FII holding peaked at 12.44% in Mar 2024 and has since fallen sharply to 6.13% — foreign institutional investors have been net sellers, likely disappointed by persistent losses.
• DII holding has surged from 5.75% to 19.33% — domestic institutional investors (mutual funds, insurance companies) have been aggressively accumulating, suggesting confidence in the long-term story.
• Public holding dropped from 24.55% to 13.17%, indicating retail investor exodus.
• Number of shareholders stands at 2,52,963 in Mar 2026, down from a peak of 3,34,075 in Mar 2024.

The divergence between FII selling and DII buying is noteworthy — it suggests that while short-term profitability concerns are driving foreign investors away, domestic institutions see value at current levels.

Peer Comparison: How Does Devyani Stack Up?

The QSR peer comparison reveals both Devyani's scale advantage and profitability challenges:

Devyani is the 3rd largest QSR company by market cap (₹14,064 crore), behind Jubilant FoodWorks (₹27,958 crore) and Travel Food (₹16,394 crore). It has the highest quarterly sales at ₹1,436.86 crore among all peers, demonstrating its market-leading scale.

However, Devyani's ROCE of 4.66% lags the peer median of 6.06%, and it is one of several QSR players reporting quarterly losses. The P/E ratio is not meaningful due to negative earnings.

Notably, the entire QSR sector is facing profitability pressures — Sapphire Foods (-₹12.63 crore) and Restaurant Brands (-₹47.43 crore) are also loss-making, suggesting industry-wide challenges rather than Devyani-specific problems.

Strengths and Weaknesses

Strengths

1. India's largest QSR franchisee with 1,000+ stores across KFC, Pizza Hut, and Costa Coffee
2. Strong brand portfolio spanning global and domestic formats
3. Robust operating cash flow of ₹919 crore in FY2026
4. Negative working capital cycle of -89 days, ensuring efficient cash management
5. DII confidence — institutional holdings rising to 19.33%
6. Revenue growth of 19% CAGR over 10 years
7. Free cash flow positive at ₹478 crore in FY2026
8. Part of RJ Corporation — backed by a diversified multinational conglomerate
9. India's eating-out market is still under-penetrated vs global peers

Weaknesses

1. Persistent net losses — three consecutive loss-making years (FY2024-2026)
2. High leverage — borrowings of ₹3,833 crore with debt-to-equity of ~2.5x
3. Declining ROCE — from 18% in FY2023 to just 4.66% in FY2026
4. Negative ROE of -1.67% — destroying shareholder value
5. Rising depreciation burden (₹654 crore in FY2026) from aggressive store expansion
6. No dividends paid since listing
7. Stock trading at 9.12x book value despite losses — expensive on a price-to-book basis
8. Low interest coverage ratio — operating profit barely covers interest + depreciation
9. FII exodus — foreign holdings halved from 12.44% to 6.13%

Valuation Perspective

With no meaningful earnings, traditional P/E valuation is not applicable. On a price-to-book basis, the stock trades at 9.12x, which is expensive for a loss-making company.

On a price-to-sales basis, the market cap of ₹14,064 crore against FY2026 revenues of ₹5,611 crore gives a P/S ratio of approximately 2.5x. For context, Jubilant FoodWorks trades at approximately 2.8x P/S while being profitable — suggesting Devyani's valuation already factors in a recovery.

The enterprise value (market cap + debt) is significantly higher. Adding borrowings of ₹3,833 crore to the market cap of ₹14,064 crore gives an approximate EV of ₹17,897 crore. Against EBITDA (operating profit + depreciation ≈ ₹849 + ₹654 = ₹1,503 crore), the EV/EBITDA multiple is approximately 11.9x — a moderate multiple for a high-growth QSR operator.

Key Investment Thesis

Bull Case

The bull case rests on several pillars:

1. India's QSR market is structurally under-penetrated — eating out frequency in India is a fraction of developed markets, offering a long runway for growth
2. Scale economics should eventually kick in — with 1,000+ stores and growing, fixed cost leverage should improve margins
3. Same-store sales growth coupled with new store additions could drive operating leverage
4. Free cash flow of ₹478 crore demonstrates the underlying business generates healthy cash
5. DII accumulation suggests institutional conviction in the long-term story
6. Operating cash flow covers capex — the business is self-funding to a significant extent

Bear Case

The bear case highlights:

1. Three years of losses with no clear timeline to profitability — the "jam tomorrow" narrative is wearing thin
2. Rising debt — borrowings have tripled from ₹1,254 crore (FY2022) to ₹3,833 crore (FY2026)
3. Depreciation is structural — new stores will continue to add depreciation charges
4. Franchisee model limits margin upside — royalty payments to Yum Brands are a fixed cost
5. Consumer spending slowdown could impact discretionary eating-out expenditure
6. Competition intensifying from home delivery platforms, cloud kitchens, and regional QSR chains

Conclusion

Devyani International represents a classic growth-vs-profitability conundrum. The company has executed an impressive store expansion strategy, growing revenues from ₹1,012 crore to ₹5,611 crore in a decade, and operates the largest QSR franchisee network in India. Its brands — KFC, Pizza Hut, and Costa Coffee — enjoy strong consumer recognition and loyalty.

However, the financial metrics tell a sobering story. Three consecutive years of net losses, a ROCE of just 4.66%, a negative ROE of -1.67%, and rising debt suggest that the current expansion is not yet translating into shareholder returns. The stock's 9.12x price-to-book valuation seems ambitious for a company that has not demonstrated consistent profitability.

The critical question for investors is: when does scale translate to profitability? The company's ₹919 crore operating cash flow and ₹478 crore free cash flow suggest the underlying business is healthy. If management can slow the pace of new store additions, improve same-store sales growth, and bring down leverage, the path to sustained profitability is achievable.

For now, Devyani International is best suited for patient, growth-oriented investors who believe in India's long-term QSR story and are willing to endure near-term volatility. Conservative or income-seeking investors should wait for clearer signs of a turnaround in profitability before committing capital.