Devyani’s Q1 margin expansion strengthens profitability and merger-synergy case

Devyani International posted Q1 FY27 revenue of Rs 1,580 crore, up 17% year-on-year, while EBITDA rose 24% to Rs 255 crore. Margin improved 100 bps to 16.1% as management prioritised average daily sales and profitability over aggressive store additions. Motilal Oswal retained its Buy rating and Rs 160 target.

— Source publishedThu, 30 Jul, 2026, 10:38 IST·First seen Thu, 30 Jul, 2026, 11:27 IST·Source NDTV Profit

What happened

Devyani International reported stronger Q1 FY27 revenue, EBITDA and margins. Motilal Oswal retained its Buy rating and Rs 160 target. Management is prioritising

Key facts

  • Consolidated revenue: Rs 1,580 crore, up 17% YoY
  • EBITDA: Rs 255 crore, up 24% YoY
  • EBITDA margin: 16.1%, up 100 basis points
  • Adjusted profit: Rs 17.8 crore versus Rs 1.5 crore YoY
  • Motilal Oswal target price: Rs 160
  • Current market price cited: Rs 118
  • Implied upside: about 35%
  • Expected recurring annual merger synergies: about Rs 220 crore
  • Estimated EBITDA gain in FY28: about Rs 500 million

Why this matters

The stronger margin profile and disciplined expansion strategy improve the strategic rationale for merger synergies by creating a more scalable, cash-generative QSR platform.

What to watch

  • Same-store sales growth and average daily sales trends across KFC, Pizza Hut and other formats.
  • Net store additions versus management’s profitability-first guidance.
  • EBITDA margin durability above 16%, especially after food, labor, rental and delivery-platform costs.
  • Evidence of merger synergies in procurement savings, central overheads and store-level profitability.
  • Adjusted profit and operating cash-flow conversion relative to EBITDA.
  • Consumer-demand indicators, competitive discounting and franchise partner brand performance.
  • Prioritize new stores in proven high-ADS catchments while pruning or relocating structurally weak outlets.
  • Use stronger EBITDA conversion to fund integration, selective expansion and balance-sheet improvement rather than broad-based discounting.
  • Push procurement, supply-chain, technology and overhead consolidation to convert the merger case from projected synergies into reported margin gains.
  • Increase premiumization, delivery mix optimization and menu engineering to protect ticket size without sacrificing traffic.