DEVYANI Q1 FY27 earnings call.
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Revenue
₹1,581 Cr
verified against source
Revenue YoY
16.5%
reported change
EBITDA
₹151 Cr
latest reported figure
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What the record says.
Devyani International delivered a strong Q1 FY27 with 16.5% YoY revenue growth to INR 581 crores, driven by KFC's 12% revenue growth and robust international performance. The company achieved its highest-ever operating EBITDA of INR 151 crores at 9.6% margin, representing 38% YoY growth. KFC maintained its momentum with 3.3% SSSG and dine-in salience improving to 57%, while own brands (Biryani by Kilo, Wango) delivered 7%+ SSSG. The Pizza Hut turnaround is underway with improving sequential trends, though it still posted a brand contribution loss of INR 4 crores. Management is focused on disciplined store expansion aligned with prior guidance, technology adoption, and preparing for the Sapphire Foods merger expected by FY27 end. Key risks include LPG inflation, wage pressures, and uncertain macro conditions impacting consumption recovery. The new leadership team is settling in, bringing fresh energy to the DIL 2.0 transformation.
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Guidance to track
- Management indicated crossing an ADS threshold of INR 105,000-110,000 would enable KFC to reach 20% brand contribution margins, as demonstrated historically. This depends on 5-6% SSSG trajectory and quality of new store openings.
- Management guided for mid-single digit to near 6% SSSG for KFC going forward, assuming stable macro conditions. This is an improvement from current 3.3% SSSG run-rate.
- Management expressed strong bullishness on BBK, targeting it to become a INR 1,000 crore brand over the next few years, building on the turnaround already achieved.
- The Sapphire Foods merger remains on track with NSE and BSE approvals received in June. Management expects completion by end of FY2027, enabling Pizza Hut push from FY28 onward.
Risks flagged
- LPG prices have significantly increased over the past few months and availability constraints persisted. While the team managed through Q1, this remains an ongoing cost pressure that could impact margins if not offset by pricing.
- Pizza Hut continues to post negative SSSG (-2.2%) and brand contribution loss. Management acknowledged structural issues between DIL-Sapphire-Yum and indicated FY28 before full energy can be deployed behind the brand post-merger.
- RBI moderated FY27 growth outlook to 6.6% while raising inflation projection to 5.1%. Below-normal monsoon forecast and El Nino risk could impact consumption recovery, though management sees stable demand so far.
- Delivery currently constitutes ~45-46% of KFC sales vs less than 10% pre-COVID. While management is rebalancing toward dining, fighting consumer convenience preferences remains challenging, especially in North markets.
Key quotes
- Pizza Hut... the biggest issue was the structure which is what we've discussed in the past. The entire three-way structure between us, Sapphire and Yum in terms of decision-making, in terms of the initiatives, in terms of innovation and so on and so forth.
- As I've mentioned in the past, the key driver for improving the brand contribution margin remains the ADS number. Once we cross a threshold of 105,000-110,000 ADS, we will be able to cross 20% brand contribution margins in KFC as we've demonstrated in the past.
- We've hired a new Chief Technology Officer... At the same time, rather than building our completely new in-house tech team, we've decided to build a core team in-house and then outsource the entire buildup to Cognizant Technologies.
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