A Detailed Research Report on Devyani International Limited

Food & Beverages Sector

Report By :
Name: Arjun Kumar

A Finlatics Research Project

 Devyani International
(NSE: DEVYANI, LTP: 220)

General Overview: Devyani International Limited (DIL), one of the most trusted chain Quick
Service Restaurant (QSR) operators in the country, is Yum Brands' (KFC & Pizza Hut) largest
franchisee in India. Devyani International Limited is also the sole franchisee in India for the
Costa Coffee brand and outlets. DIL also caters to South Indian vegetarian cuisine
aficionados with Vaango. This ten-year-old brand is notable in the cuisine Retail Business
(FRB) segment with its Food Courts. DIL has a significant presence in Indian airports, where
it provides a variety of F&B options.

Shareholding Pattern: Promoters holding in Devyani International is 62.76%, of which RJ

Corp Limited and Varun Jaipuria have 59.30% and 3.29%, respectively. The chairperson for RJ
Corp Limited is Ravi Kant Jaipuria himself. Thus, this is a family-owned company indirectly.
FIIs have consistently grown their holding over the last two years(2021-2023). In 2021, FII
holding was 7.86%, which increased to 12.05% in 2023. As well as DIIs have increased their
holdings from 4.8% to 8.8% from 2021-2023. On the other hand, public holding decreased
from 24.4% to 16.4% from 2021-2023. This ultimately shows a better future because the
promoters are interested in increasing their stake, and the smart money is willing to bet on
Devyani.

Strengths, Weaknesses, Opportunities & Threats (SWOT) analysis:

Strengths
1. The company operates in
multidimensional business verticals.
2. It has beverages as well as food items
along with some indigenous South Indian
stores like Vaango. This gives a diversified
portfolio to Devyani.
3. Along with that company has a strong
promoter group RJ Corp which brings in
experience of 2 decades.
Weakness
1. The corporation operates on razor-thin
margins and finds it difficult to increase
them.
2. Inconsistent ROCE over the last seven
years, ranging from -19% to 18%.
3. Though the company is reporting
repeated profits, it is not paying out
dividends.
 4. Devyani International's revenue is
4. Talking about the growth story, the primarily reliant on a few brands, making it
company increased its core brand outlets sensitive to swings in their popularity.
from 469 to 605 in just 2 years.

Opportunities
1. Expansion into Emerging Markets:
Devyani Multinational can look for
expansion prospects in emerging markets
with a growing middle-class population and
a preference for multinational QSR brands.
2. Menu Diversification: Adding new menu
items or changing menus to accommodate
local preferences will help to attract a more
extensive client base.
3. Adopting digital technology for online
ordering, delivery, and engagement can
improve convenience and consumer loyalty.
4. Offering healthier menu choices in
response to the trend towards healthier
eating might tap into a rising market niche.
Threats
1. Economic Recessions or Downturns:
Economic recessions or downturns can
reduce consumer spending on dining out,
affecting revenue.
2. Changing Consumer Preferences:
Changes in consumer preferences and
dietary trends might impact the appeal of
specific QSR companies or menu items.
3. Changes in food safety rules, labour laws,
or taxation can all increase operational
expenses and compliance requirements.
4. Intense competition from other QSR
chains and local food businesses
can undermine market share and
profitability.

5. Initiatives for Sustainability: Sustainable 5. Concerns about health and safety:

practises and initiatives can help a
company's image and appeal to
environmentally sensitive customers.
Health-related issues, food safety mishaps,
or public health emergencies (e.g.,
pandemics) can have a significant influence
on the company's reputation and
operations.

SWOT Analysis Rating: Strengths(High), Weaknesses(Moderate), Opportunities(High),

Threats(Low).

Competitor Analysis: Devyani International’s major competitor is Jubilant Foodworks, with a

Market Cap of 35000 Cr. The median P/E for Industry is 120.47, with Devyani International at
113.89, which shows that it still has room for price appreciation. The Return on Capital
Employed(ROCE) for Devyani International is 18.43%, the highest among competitors such as
Jubilant Foodworks, Sapphire Foods, Westlife Food, etc. McDonald's is one of the largest
QSR chains globally, known for its iconic brand and extensive menu. It competes with
Devyani International's brands like KFC and Pizza Hut. In the coffee and cafe segment,
Starbucks is a significant competitor, competing with Devyani's Costa Coffee brand. Devyani
International also faces competition from local and regional QSR chains and restaurants in
each market it operates in.
Conclusion: Finally, Devyani International operates in a highly competitive food and
beverage business, focusing primarily on the quick-service restaurant (QSR) and casual
dining segments. The company has a strong brand portfolio, including globally recognised
names such as KFC, Pizza Hut, Costa Coffee, and Taco Bell, allowing it to appeal to a wide
range of client tastes. Furthermore, the company's global presence and franchise model
enable rapid growth and revenue diversification.

Devyani International, on the other hand, confronts significant obstacles. It relies heavily on
a few key brands, making it vulnerable to changes in consumer preferences and market
trends. Geographic concentration and fierce competition from global behemoths such as
McDonald's and Yum! Brands and local competition present extra challenges.

Devyani International should continue expanding into emerging regions and investigate
menu diversity to appeal to local tastes and capitalise on opportunities. Adopting digitisation
and sustainability efforts can help it gain a competitive advantage. Nonetheless, the
corporation must remain attentive amid economic downturns, shifting consumer tastes,
regulatory changes, and health-related concerns that may impact its operations.

Devyani International's success in this dynamic climate depends on its ability to react
quickly, innovate, and maintain the quality and consistency of its services while mitigating
risks and maximising its strengths in an ever-changing competitive landscape.