Stock to Buy Now for an Upside Potential of More Than 25%—Do You Own It?
Stock to Buy: Investors looking for high-growth stocks in India’s booming Quick Service Restaurant (QSR) sector might want to keep an eye on Devyani International Ltd (DIL). With a strong brand portfolio, aggressive expansion strategy, and a bullish outlook from top brokerages, this stock presents a compelling opportunity for those seeking significant upside potential.
The Growth Potential of the Indian Restaurant Market
India’s full-service restaurant market is on an impressive growth trajectory. According to industry reports:
- The market is estimated to be USD 37.93 billion in 2025 and is expected to reach USD 64.72 billion by 2030, growing at a CAGR of 11.28%.
- The Indian food service market is forecasted to reach $95.75 billion in 2025.
- India has over 500,000 restaurants, with QSR chains playing a pivotal role in the industry’s transformation.
With these promising statistics, Devyani International is strategically positioned to benefit from this rapid expansion.
Devyani International Stock Performance
Currently, Devyani International Ltd has a market capitalization of ₹20,204.96 crore. Its shares were last seen trading at ₹167.50, reflecting a slight decline of 1.38% compared to its previous close of ₹169.85.
Despite this minor dip, analysts believe the stock holds significant upside potential.
Brokerage Recommendation: Strong Buy
One of India’s top brokerage firms, Nuvama, has issued a ‘Buy’ recommendation on Devyani International with a target price of ₹214 per share. This target suggests an upside potential of 28% from its current levels.
Why Are Analysts Bullish on DIL?
- Aggressive Expansion Strategy
- The company added 44 new stores in the last quarter, bringing the year-to-date (YTD) total to 93 new stores.
- It is well on track to meet its target of 100 new store openings annually.
- Strong Growth in KFC Operations
- KFC, one of its flagship brands, is witnessing a positive response to promotions and branding efforts.
- Management remains optimistic about its growth and plans continued investments in store expansion.
- Strategic Marketing Adjustments for Pizza Hut
- While KFC has been performing well, Pizza Hut’s promotions haven’t yielded the expected results.
- The company is recalibrating its marketing spend from January onwards to improve sales.
Financial Performance Overview
While revenue has surged by 53% year-on-year, Devyani International faced a net loss in Q3 FY25. Here’s a quick look at its financials:
| Metric | Q3 FY24 | Q3 FY25 | % Change |
|---|---|---|---|
| Revenue (₹ Cr.) | 843.13 | 1,294.40 | +53% |
| Net Profit (₹ Cr.) | 5.07 | -7.64 | -260% |
Although the company posted a loss, the overall growth in revenue suggests that investments in expansion and marketing are expected to pay off in the long run.
Expansion Plans and Brand Portfolio
Devyani International is continuously strengthening its portfolio by securing exclusive rights for international food brands in India. Some recent additions include:
- Tealive
- New York Fries
- Sanook Kitchen
The company now operates:
- 645 KFC outlets
- 593 Pizza Hut outlets
- 207 Costa Coffee outlets
DIL is planning to open:
- 100-110 new KFC stores
- 60-70 new Pizza Hut stores
This aggressive expansion is expected to boost revenues and profitability in the coming quarters.
Future Outlook: Why DIL Is a Long-Term Winner
With India’s QSR industry booming and Devyani International’s strategic growth initiatives, the company is well-positioned to capitalize on the growing demand for branded fast food.
Key reasons why DIL remains an attractive stock for long-term investors:
- Market leadership as the biggest Yum Brands franchisee in India.
- Strong brand portfolio across multiple QSR segments.
- Rapid expansion with aggressive store openings.
- Potential for margin improvement as new outlets mature and marketing strategies optimize.
Stock Valuation and Key Ratios
Here’s a snapshot of Devyani International’s financial ratios:
| Metric | Value |
|---|---|
| Market Cap | ₹20,060 Cr. |
| Current Price | ₹166 |
| High / Low | ₹223 / ₹142 |
| Stock P/E | 1,496 |
| Book Value | ₹9.66 |
| Dividend Yield | 0.00% |
| ROCE | 8.73% |
| ROE | 4.92% |
| Debt to Equity | 2.66 |
| Industry P/E | 396 |
| Debt | ₹3,099 Cr. |
| PEG Ratio | 73.1 |
| Intrinsic Value | ₹7.73 |
| Graham Number | ₹6.17 |
| Piotroski Score | 3.00 |
| ROIC | -18.9% |
Final Verdict: Should You Buy Devyani International?
With a 28% upside potential, strong revenue growth, and aggressive expansion plans, Devyani International appears to be a promising investment in the fast-growing QSR sector.
However, investors should also consider:
- Short-term losses due to high marketing and expansion costs.
- High debt levels, which may impact profitability in the near term.
For long-term investors who believe in the growth of India’s food service industry, this stock could be a solid pick. Do you own it? If not, it might be time to consider adding it to your portfolio!
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.