Company Overview

Devyani International Limited, a leading Quick Service Restaurant operator and franchisee for Yum! Brands (KFC, Pizza Hut), Costa Coffee, and other brands, reported mixed FY26 results amid significant corporate developments and expansion activities.

Financial Performance

Consolidated Results: Revenue grew 13.3% to ₹56,114.79 million, but the company reported a net loss of ₹425.35 million compared to ₹69.00 million loss in FY25. Key drivers included increased finance costs (₹2,757.36 million), depreciation & impairment charges (₹6,698.19 million), and exceptional items of ₹208.62 million related to labor code changes and lease disputes.

Standalone Performance: Revenue increased 6.7% to ₹35,726.42 million, but the company swung to a net loss of ₹331.49 million from a profit of ₹237.19 million in FY25, reflecting similar cost pressures and investment activities.

Strategic Developments

Merger with Sapphire Foods

  • Announced January 1, 2026 with appointed date of April 1, 2026
  • Exchange ratio: 177 Devyani shares for every 100 Sapphire shares
  • Expected to create entity with over 3,000 restaurants and ~USD 1 billion revenue
  • Subject to regulatory approvals including SEBI No Objection Letter

Sky Gate Hospitality Acquisition

  • Completed acquisition of 80.72% equity stake on June 10, 2025 for ₹4,196 million via preferential share issue
  • Increased to 100% ownership by March 7, 2026, making it wholly-owned subsidiary
  • Added brands: Biryani By Kilo and Goila Butter Chicken
  • Purchase consideration included equity shares and preference shares
  • Added ₹4,946.70 million in brands and ₹1,705.41 million in goodwill

Operational Highlights

  • Store network expanded to 2,256 stores globally (India: 1,857, International: 399) with 217 net additions
  • KFC: 1,169 stores globally (India: 783), Pizza Hut: 639 stores in India
  • International business revenue grew 13.8% to ₹18,594 million with brand contribution of ₹3,173 million
  • Employees: 22,500+ globally

Capital Structure & Corporate Actions

  • Equity share capital increased to ₹1,232.94 million from ₹1,206.27 million
  • Preferential allotment of 23,718,413 equity shares at ₹176.78 per share for Sky Gate acquisition
  • ESOP allotment of 29,55,000 equity shares under ESOP Scheme 2021
  • Promoter holding: 61.36% of paid-up equity share capital
  • No dividend recommended for FY26 due to losses

Leadership Changes

  • Mr. Virag Joshi superannuated as Whole-time Director (President & CEO) effective March 31, 2026
  • Mr. Manish Dawar elevated as Whole-time Director (President & Group CEO) effective April 1, 2026
  • Mr. Anupam Kumar appointed as Chief Financial Officer effective April 1, 2026

Regulatory & Compliance Matters

Auditor Qualifications: Joint auditors reported qualifications regarding audit trail features not being enabled in accounting software at Devyani International Limited and two subsidiaries (Sky Gate Hospitality, Blackvelvet Hospitality), citing non-compliance with Companies Act requirements.

AGM Notice: 35th Annual General Meeting scheduled for August 14, 2026 through video conferencing to approve financial statements and discuss merger plans.

Investment Activities

  • Total investments of ₹9,212.95 million in subsidiaries and joint ventures
  • Significant investment in Devyani International DMCC, Dubai (51% stake) with Camas Investments Pte. Ltd.
  • Acquisition of Restaurants Development Co., Ltd. (Thailand) for THB 4,681.99 million
  • Loans to subsidiaries: ₹1,178.17 million

Forward Outlook

The company faces challenges from high finance costs and integration of acquisitions, but the proposed merger with Sapphire Foods aims to create scale benefits and operational synergies. Store expansion continues with focus on both domestic and international markets, particularly KFC brand development across operating regions.