Devyani International IPO. Is it Worth Subscribing?

Devyani International IPO Analysis

Business Introduction:

Devyani International Ltd, founded in 1991, is Yum Brands’ largest franchisee and one of the major quick-service restaurant (QSR) chain operators in India, with 655 locations in 155 cities as of March 31, 2021. Yum Brands Inc. owns and runs several fast-food restaurants, including Pizza Hut, KFC, and Taco Bell. 

Devyani is Pepsico’s largest bottling partner and has interests in the Indian retail food and beverage (F&B) industry. Initially, the firm began with a Pizza Hut location in Jaipur but quickly expanded into KFC and Pizza Hut locations. As of March 31, 2021, the company has 264 KFC locations, 297 Pizza Hut locations, and 44 Costa Coffee locations around India. A very well-diversified business portfolio.

Devyani business segments: 

  1. Core Brands (KFC, Pizza Hut, and Costa Coffee locations throughout India), 
  2. International Business (locations in other countries such as Nepal and Nigeria), and
  3. Other Businesses (own branded stores, i.e. Vaango, Food Street, Masala Twist, Ile Bar, Amreli, and Ckrussh Juice Bar).
  4. Except in captive markets where Yum India already has KFC and Pizza Hut locations, the business has non-exclusive franchise rights to open KFC and Pizza Hut locations in India. It has bought 73 KFC restaurants from Yum India—the worldwide QSR chain’s India subsidiary—over the last three years.

About founders: 

Devyani International is an associate firm of RJ Corporation. The company is promoted by Ravi Kant Jaipuria, Varun Jaipuria, and RJ Corp Limited.

Financial Information:

Devyani International Ltd. is being offered at 9.5 times market capitalization/sales as of the FY21 financial statement, compared to peers such as Jubilant Foodworks Ltd. (15x), Westlife Development Ltd. (8.8x), and Burger King India Ltd. (14x).

Sl.NoBrand Contribution (FY21)Revenue from Operations (In crore)Gross Margins (%)
2Pizza Hut287.974.1
3Costa Coffee21.478.5
4Other Business59.872.2
5International Business115.464.7

We believe the company is well-positioned for long-term growth, given its portfolio of renowned global brands catering to a diverse spectrum of client preferences, cross-brand synergies, store network expansion, and positive EBITDA results

1Net Worth (In crore)113.8-189.1-70.2
2Revenue from Operations (In crore)1134.81516.41310.6
3EBITDA (In crore)226.9255.5279
4EBITDA Margins (In %)2016.921.3
5Profit After Tax (In crore)-55.2-121.7-79.2
6Retrun on Net Worth (In %)-48.5NaNa

Devyani is well-positioned to benefit from emerging industry trends due to its robust portfolio of globally known brands that appeal to a diverse spectrum of client preferences. 

The company’s financial performance has been mediocre, which has been exacerbated in FY21 by the epidemic. However, the corporation plans to enhance unit performance, which will result in improved profits

Reserves and Surplus:

Revenue from Operations:

Capitalization Statement:

Investors may subscribe for listing gains in light of current market sentiments.

Company Opportunities and Strength:

  1. The product line-up of well-known quick-service restaurant brands.
  2. Yum Brand’s largest franchisee in India.
  3. Cross-brand synergies result in operational leverage.
  4. Financially disciplined strategy with a significant emphasis on cash flow management.
  5. With 264 KFC locations, 297 Pizza Hut locations, and 44 Costa coffee locations, the company has a strong retail network.
  6. A portfolio of globally renowned brands catering to a diverse variety of customer preferences.
  7. Present in significant consumption markets such as Delhi-National Capital Region (NCR), Mumbai, Bengaluru, Kolkata, and Hyderabad.
  8. Assures that all of its brands work in unison.
  9. Cost-cutting measures are implemented at all levels.
  10. Management team with extensive knowledge of all segments of the business.

Company Threats and Weakness:

  1. The COVID-19 epidemic has had a significant influence on the company’s business and operations.
  2. The possibility that the lockdown may have a detrimental influence on the company’s future performance and share price
  3. Dependence on Yum Inc. for KFC and Pizza Hut locations, and on Costa for Costa Coffee locations. Inability to maintain and extend these arrangements can have a detrimental effect on the company’s operations, financial results, and financial situation.
  4. Dependence on the success and reputation of its core brands on a global scale.
  5. The inability to discover acceptable store sites could have an adverse effect on the company’s expansion strategy.
  6. Inadequate and late delivery of high-quality ingredients, packaging materials, and other essential supplies can have a negative influence on the company’s operations.
  7. Losses incurred during the last three fiscal years.
  8. Real and perceived health concerns related to food-borne illnesses, epidemics, product quality, and any unfavorable food-related incidents might have an effect on the company’s operations.

Management Analysis:

The company has well-qualified, strong management and team. Management has been persistent in making the IPO a new success and is working tirelessly during these unprecedented times.  Management team with extensive knowledge of all segments of the business.

The Board of Directors is equipped with factors that are needed for a company to be successful. There have been no issues in this regard noted. I noted no major complaints against the company and its ethical behavior. Overall, Management seems fine.

Devyani International IPO Details:

1IPO Issue opens onAugust 4, 2021
2IPO Issue closes onAugust 6, 2021
3Issue TypeBook Built Issue IPO
4Face ValueRs. 1 per equity share
5IPO PriceRs. 86 to Rs. 90 per equity share
6Minimum Order Quantity1 lot = 165 Shares, Amounting Rs. 14,850
7Maximum Order Quantity13 lots = 2145 Shares, Amounting Rs. 1,93,050
8Listing AtNSE and BSE
9Issue SizeAmount aggregating up to Rs. 1838 crore
10Fresh IssueAmount aggregating up to Rs. 440 crore
11Offer for Sale15.53 crore Equity Shares of Rs. 1 each, aggregating up to Rs. 1398 crore
12Allotment dateAugust 11, 2021
13Initiation of RefundsAugust 12, 2021
14Credit of share to Demat AccountAugust 13, 2021
15IPO Listing dateAugust 16, 2021

Use of IPO proceeds:

The company intends to use the proceeds of the offering to repay or make advance payments on long-term borrowings totaling Rs. 324 crore. As of June 30, outstanding borrowings totaled Rs. 541.58 crore.

Risk Factors:

  1. Dent on demand – The ongoing Covid-19 pandemic has had a substantial impact on business and operations. The pandemic’s future impact on its operations, including its effect on customers’ ability or desire to dine-in, is unknown but could be material and continue to have a negative impact on its business prospects, strategies, business operations, or future financial performance, as well as the price of its equity shares.
  2. Dependency – It is reliant on Yum for its KFC and Pizza Hut locations, which account for a sizable portion of its revenue, and the termination or failure to renew these arrangements would have a major adverse effect on its business, results of operations, and financial condition.
  3. Reliant – It is reliant on Costa IDA for the operation of its Costa Coffee outlets, and the termination or major alteration of Costa IDA’s existing terms would materially and adversely affect its ability to continue the Costa business and operations, as well as its future financial performance.
  4. Separate identity – The operation of its major brands—KFC, Pizza Hut, and Costa Coffee—is contingent upon their separate material agreements, which impose various restrictions, prohibitions, and other responsibilities on their operations that could impair their capacity to grow.

Industry Overview:

The foodservice sector in India is predicted to grow rapidly in the coming years, primarily due to the development of the delivery ecosystem.

In 2020, the Indian foodservice sector is expected to earn total revenue of 8,366.6 billion rupees (the US $117.5 billion), up 1.9 percent from 7,601.4 billion rupees (the US $18.5 billion) in 2015. The increase was primarily fueled by an increase in the number of transactions, which increased at a CAGR of 2.4 percent over the same period. Greater delivery, increased demand for dining out, urbanization, and increased exposure to a variety of food varieties all contributed significantly to transaction growth, particularly in 2020 due to COVID-19.

Between 2020 and 2025, the number of outlets is predicted to expand at a CAGR of 4.5 percent. Growth in the quick service restaurant (“QSR”) channel, aided by urbanization and growing young exposure to various meal kinds, is predicted to be critical to the foodservice industry’s overall growth. Total foodservice revenue is estimated to reach 17,220.3 billion (US $219.4 billion) in 2025, growing at a 15.5 percent compound annual growth rate from 2020 to 2025.


Rapid urbanization, the expansion of the internet, and a lack of time for meals as a result of busier lifestyles all contributed to the growth of western fast food popularity in India. Simultaneously, big international fast-food companies increased their outlet count during this time period, enhancing the availability of these items for Indian consumers and encouraging them to consume more.

In future years, the channel is likely to experience a strong resurgence. driven by the country’s economic recovery and an increase in consumer purchasing power.

In the immediate future, these companies’ primary focus will be on technological skills. As the pandemic continues, contactless eating and deliveries will be a priority through 2021. Like 2020, the year is likely to witness an increase in the number of fast-food restaurants that offer QR code-enabled menus.

Menu innovation will also be a significant growth factor. Given consumers’ increased knowledge of their health, corporations are required to reduce the calorie and sugar content of their offerings.

Cloud kitchens will proliferate rapidly in the post-COVID-19 age. These establishments, which are only for delivery, are intended to draw transactions from people who are hesitant to use regular eateries. Wendy’s, for example, plans to open 250 cloud kitchens throughout the country in collaboration with Rebel Foods.

The prominence of home delivery in Indian quick-service restaurants is likely to continue to expand as a result of changing lifestyles and customer eating habits in a post-COVID environment. To meet client demand, operators will be obliged to update and digitize their operations and have an online presence. Cloud kitchens’ spread in the future will attest to the growing demand for home delivery and a growing reluctance to visit traditional dine-in establishments.

How to apply for Devyani International – IPO?

Steps to be followed to apply for “Devyani International IPO – DEVYANI” via Zerodha console:

Step 1: Visit the Zerodha website and log in to Console.

Step 2: Go to Portfolio and click the IPOs link.

Step 3: Go to the “DEVYANI” row and click the ‘Bid’ button.

Step 4: Enter your UPI ID, Quantity (In lots), and Price.

Step 5: ‘Submit’ IPO application form.

Step 6: Visit the UPI App (net banking or BHIM) to approve the mandate.

Do not have a brokerage account? Apply for Zerodha – India’s top brokerage service.

Watch YouTube video for more information:

Disclaimer: All the information on this website is published in good faith and for general information purpose only.

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