1. Opening Hook
While India’s GDP hit 7.8% and GST 2.0 promised a “simpler” tomorrow, Devyani International’s Q2 had everythingbutsimplicity — vegetarian festivals, unseasonal rains, and a consumer who won’t order unless there’s a discount. Even so, the Colonel kept frying and the Hut kept baking, driving revenues up 13%. Ravi Jaipuria called it “resilient execution”; investors might call it “discounting discipline.” Add a few new teas, biryanis, and burgers — and you’ve got a menu that’s part expansion, part experiment. Stick around — things get spicy when GST, grease, and growth meet in one quarter.
2. At a Glance
- Revenue ₹1,377 crore (+13% YoY):Growth despite rain, festivals, and a value-hungry consumer.
- EBITDA ₹194 crore (14.1% margin):Flat, but Sky Gate weighed like an extra cheese crust.
- KFC India revenue ₹572 crore (+5.3%):Fried chicken stayed crunchy despite soggy demand.
- Pizza Hut SSSG -4%:The crust held, but demand flopped. 🍕
- International revenue ₹450 crore (+14%):Thailand carried the flag — 16.7% margins!
- Store count 2,184:Added 30 KFCs, 3 Pizza Huts, and 6 Tealives. Coffee, tea, but still no break.
3. Management’s Key Commentary
Ravi Jaipuria:“GST 2.0 is a historic simplification; early signs are encouraging.”(Translation: Bureaucracy’s back, but we’ll smile through it.)😏
“We launched Chana Chatpata Burger at ₹69 to expand our vegetarian range.”(Translation: Navratri-proof menu unlocked.)
“Sky Gate integration remains on track; breakeven by March 2026.”(Translation: Still burning cash, but we’ve set a calendar reminder.)
“Festivals and rains impacted out-of-home consumption.”(Translation: Blame God and government, not gross margins.)
Manish Dawar (CFO):“Excluding Sky Gate, EBITDA margins would’ve been 7.6%.”(Translation: The baby brands bit into the pie.)
“KFC margins dropped due to higher delivery salience and aggregator fees.”(Translation: Swiggy ate our margins along with the fries.)
“We’ve test-launched Tealive and it’s doing well.”(Translation: Because chai margins > pizza margins now.)☕
“International business — especially Thailand — remains our margin hero.”(Translation: Pad Thai pays better than Paneer Pizza.)
4. Numbers Decoded
| Metric | Q2 FY26 | YoY Growth | Commentary |
|---|---|---|---|
| Consolidated Revenue | ₹1,377 cr | +13% | Growth on weak consumption base |
| Gross Margin | 67.8% | -1.9% | Discounts hit harder than monsoon rains |
| EBITDA (pre-IndAS) | ₹93 cr | — | 6.8% margin – Sky Gate strikes again |
| KFC Revenue | ₹572 cr | +5.3% | 734 stores frying away |
| Pizza Hut Revenue | ₹186 cr | Flat | SSSG -4%, ADS ₹33,000 — not rising dough |
| Own Brands (BBK, Vaango, Goila) | ₹86 cr | +30% est. | BBK spicy, Sky Gate loss ₹3-4 cr |
| International | ₹450 cr | +14% | 16.7% brand contribution — stellar Thailand |
| Total Stores | 2,184 | +13% YoY | Expansion amid tight margins |
Sky Gate is the unwanted side dish that keeps showing up in the bill.
5. Analyst Questions
Q:Are KFC’s underlying SSSG trends stable?A:Adjusted for rain and Navratri, yes. Still “moderately negative.”(Translation: Not great, but not disastrous either.)
Q:Sky Gate losses?A:Double-digit brand contribution losses; breakeven by March 2026.(Translation: “Soon” is our favorite financial term.)
Q:Pizza Hut rationalization by Yum — impact?A:None. We’re contractually insulated.(Translation: Even Yum can’t shut our ovens.)
Q:Demand trends post-Dussehra?A:Some pickup, but still muted.(Translation: Hope is up, orders aren’t.)
Q:Thailand growth and cash flow?A:Margins stable, 20 new stores this year; free cash flow post debt repayment.(Translation: The Pad Thai fund still paying EMI.)
6. Guidance & Outlook
Devyani expects muted demand in India through Q3 but is banking on festive
