Devyani International Ltd Q2FY26: 2,184 Stores, 12.6% Revenue Growth, -₹24 Cr PAT — When KFC’s Zinger Meets Earnings Finger

1. At a Glance

Devyani International Ltd (DIL) just served up its Q2FY26 platter — a mix of spicy store expansion, tepid profitability, and a side of debt. India’s largest franchisee of Yum! Brands and the proud operator of KFC, Pizza Hut, and Costa Coffee posted revenue of ₹1,377 crore, up 12.6% YoY, while its PAT dropped to -₹19.7 crore, down a staggering 98,719% YoY (yes, that’s not a typo — even screener gasped). The company added 30 new KFC outlets, taking its total store count to 2,184 across seven countries.

At a market cap of ₹19,140 crore and a current price of ₹156, Devyani’s stock has been stuck in a soggy bucket — down 11.9% over 6 months and flat over 3 months, despite the company flexing 33% 3-year sales CAGR. But earnings? Well, let’s just say Colonel Sanders would have demanded a new recipe. With a Debt-to-Equity of 2.15, ROCE at 6.4%, and ROE barely 0.5%, the balance sheet feels less like a fast-food powerhouse and more like a credit-card binge after a pizza party.

Will the Biryani by Kilo acquisition finally add masala to the bland financials, or is this just another reheated quarter? Grab your Costa, because this QSR story is getting extra crispy.

2. Introduction

Remember when fast food meant comfort, speed, and indulgence? Now, in corporate India, it also means debt, dilution, and delayed profitability. Devyani International, part of Ravi Jaipuria’s RJ Corp empire, is the poster child of Indian QSR ambition — running everything from KFC’s fried chicken to Pizza Hut’s stuffed crusts to Costa Coffee’s overpriced caffeine dreams.

Founded in the era when Domino’s was still learning desi toppings, Devyani has grown into a 2,000-store gorilla spanning India, Nepal, Nigeria, and Thailand. Yet, this quarter reminds us that scale doesn’t always mean stability. Revenue grew 12.6% YoY, but profits flipped negative again, wiping off earlier gains.

Why? Higher employee and lease costs, inflation biting into fried margins, and aggressive expansion that burns cash faster than a delivery boy in Delhi traffic. But the management isn’t slowing down — they’re busy acquiring Sky Gate Hospitality (parent of Biryani by Kilo, Goila Butter Chicken, and The Bhojan). Because if you can’t beat food delivery players, you might as well buy their biryani.

The stock, meanwhile, trades at 12.4x book value — rich for a company with negative PAT and a caffeine addiction. Investors may feel they’ve ordered extra cheese but got extra leverage instead.

3. Business Model – WTF Do They Even Do?

Devyani is essentially India’s royal franchise factory. Think of it as a professional rent collector for global food giants. It doesn’t own the recipes — it rents the brand, runs the stores, pays hefty royalties, and hopes volume will save the margins.

Here’s the dish:

Core Brands (82% of FY24 revenue) – KFC, Pizza Hut, Costa Coffee. The holy trinity that keeps the fryers running.
International Business (12%) – KFC in Nigeria, Nepal, and now Thailand (acquired via Restaurants Development Co. in 2024).
Other Brands (6%) – Homegrown Vaango (South Indian cuisine) and The Food Street (mall & airport food courts).

They pay 6.3% of gross sales as royalty to Yum! Brands, and another 6% for Costa Coffee. Add 6% mandatory advertising spend, and you realize 12% of every rupee earned goes to marketing and the franchisor — before rent, salaries, or the chicken.

And yet, they’re expanding faster than a Swiggy delivery radius — from 1,800 stores in Q1FY25 to 2,184 stores now, aiming for 2,000+ by FY26 (which, fun fact, they’ve basically hit already).

The model works when volume explodes, but with inflation biting and costs rising, each new store is a gamble. The Thailand acquisition added nearly 295 KFC stores, but integration costs and local currency exposure have given the P&L a mild indigestion.

Still, the dream is clear: to dominate every mall, every airport, and every hungry stomach from Chennai to Chiang Mai.

4. Financials Overview

Metric	Latest Qtr (Q2FY26)	YoY Qtr (Q2FY25)	Prev Qtr (Q1FY26)	YoY %	QoQ %
Revenue (₹ Cr)	1,377	1,222	1,357	12.6%	1.5%
EBITDA (₹ Cr)	192	196	206	-2.0%	-6.8%
PAT (₹ Cr)	-19.7	-5	2	-294%	-1,085%
EPS (₹)	-0.18	0.00	0.03	N/A	N/A

Commentary:
Devyani’s sales are rising, but profitability is evaporating faster than cold coffee in May. EBITDA margins have shrunk to 14%, down from 22% pre-pandemic glory. The company has now posted three negative PAT quarters out of the last six, which is a red flag for a ₹19,000 crore market-cap QSR chain.

“High growth, low profit” seems to be the Jaipuria family recipe — much like eating KFC every

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