Biryani By Kilo: Devyani Share Price Target Sees Upside Revision On Expanding Delivery Menu

Devyani International Ltd received a revision successful its target value by Nuvama Institutional Equities, pursuing nan company's acquisition of 80 per cent liking successful Sky Gate. With this purchase, Devyani will now further grow its offerings by entering categories of premium Biryani (Biryani by Kilo-BBK), North Indian Food (Goila Butter Chicken) and affordable regular vegetarian meals (The Bhojan).

Following this, Nuvama has upped its target value connected Devyani International to Rs 216 from Rs 179 earlier, while maintaining its 'Buy' standing connected nan stock. 

The woody transaction is being done astatine a trailing 12 period EV/Sales of astir 2 times, which is higher than what it had paid for nan caller acquisition of a Thailand business (0.8–1 times. 

"Although this acquisition forms a little proportionality of nan business presently (5 per cent of FY25E revenue), we expect Devyani to standard it up importantly fixed its expertise successful operating
and description pinch beingness of 1,658 stores crossed nan state crossed formats," Nuvama said.

Devyani is acquiring nan entity astatine an equity valuation of Rs 519 crore and would bargain 80.72 per cent successful a secondary information from existing investors. This compares against its previous
fund-raise astatine Rs 780 crore (pre-money valuation). The information will beryllium predominantly settled by measurement of Devyani equity swap. With this latest acquisition, Devyani will person 10 brands successful 10 different categories.

The acquisition of Sky Gate aligns good pinch Devyani's imagination of becoming a multi-brand and multi-category offering. This is affirmative arsenic it gives nan institution an replacement description lever different than KFC, Nuvama said. 

The Biryani category, which forms a large information of Sky Gate’s revenue, has each nan qualities of a QSR offering and a ample TAM, nan brokerage said.

"This transaction will lead to dilution of 1.93 per cent for existing DIL’s shareholders and is apt to beryllium completed by May," Nuvama said.

Nuvama said nan caller forays into different categories and brands — Tealive, New York Fries –
NYF, Sanook Kitchen (all 3 successful Nov-24) and nan Sky Gate acquisition now — shows Devyani's imagination of transforming into a Multi-Brand play, a marked departure from its earlier concentrated play successful KFC and Pizza Hut. 

"We expect nan profitability ramp-up astatine Sky Gate to statesman from FY26 fixed DIL’s expertise and scale, and hence tweak FY26E/27E Ebitda by -4 per cent/+1 per cent. Valuing Sky Gate’s business separately astatine 2 times 9MFY27E EV/sales yields a revised target value for Devyani of Rs 216 (earlier Rs 179); support ‘BUY’," Nuvama said.

Published on: Apr 25, 2025 8:09 AM IST