Devyani (DEVYANI) Q1 24/25 earnings summary

Executive summary

• Added 54 new stores in Q1 FY25, reaching 1,836 stores as of June 30, 2024, with a target of 2,000 stores by year-end and a focus on under-penetrated markets and enhanced customer experience.

• Consumer sentiment remained stable amid macroeconomic challenges and international conflicts, with innovative marketing and promotional campaigns launched to drive growth.

• Improved performance driven by seasonality, cost leverage, and better average daily sales (ADS), with lower impact from Nigerian currency devaluation.

• Thailand business showed good growth post-acquisition, contributing to consolidated results.

• Unaudited financial results for the quarter ended 30 June 2024 were approved, with both standalone and consolidated statements reviewed by joint statutory auditors with unmodified opinions.

Financial highlights

• Q1 FY25 consolidated revenue from operations was INR 12,219 million, up 16.7% quarter-over-quarter and 44.3% year-over-year.

• Consolidated gross margin was 69.2%, flat sequentially; brand contribution margin improved to 15.3%.

• Consolidated reported EBITDA for Q1 FY25 was INR 2,234 million, up 28.5% QoQ, with EBITDA margin at 18.3%.

• Profit before tax (PBT) for Q1 FY25 was INR 305 million, compared to a loss of INR 380 million in Q4 FY24.

• Profit after tax (PAT) for Q1 FY25 was INR 293.89 million, reversing a loss of INR 337.64 million in the same quarter last year.

Outlook and guidance

• Optimism for industry rebound during the festive season, with expectations of improved consumer sentiment and continued expansion.

• Targeting 100+ new KFC stores and 50-60 Costa Coffee stores in FY25.

• Cautious approach to Pizza Hut store expansion until brand performance stabilizes.

• Management remains bullish on the medium- and long-term prospects for the QSR industry in India, citing robust economic growth, rising disposable incomes, and urbanization as key drivers.