DEVYANI - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 2.2

📊 Core Financials

• Revenue & Profitability: PAT turned negative at -14.3 Cr. vs 6.21 Cr. previous quarter, showing severe earnings pressure.
• Margins: ROE at 2.20% and ROCE at 7.53% reflect weak efficiency and profitability.
• Debt Ratios: Debt-to-equity at 1.59 — highly leveraged balance sheet, raising solvency concerns.
• Cash Flows: Dividend yield at 0.00% — no shareholder returns, reinvestment focus but weak financial health.

💹 Valuation Indicators

• P/E Ratio: Not meaningful due to negative EPS (-0.14 ₹).
• P/B Ratio: Current Price 131 ₹ / Book Value 12.4 ₹ ≈ 10.6, premium valuation despite weak fundamentals.
• PEG Ratio: Not available — growth outlook uncertain.
• Intrinsic Value: Current valuation unjustified given losses and high leverage.

🏢 Business Model & Competitive Advantage

• Operates in quick-service restaurants (QSR), managing franchises like KFC, Pizza Hut, and Costa Coffee.
• Competitive advantage lies in brand partnerships and scale, but profitability remains under pressure.
• Institutional sentiment mixed: FII holdings reduced (-2.87%), while DII holdings increased (+1.67%).

📈 Technical & Entry Zone

• DMA 50: 146 ₹ | DMA 200: 162 ₹ — stock trading below averages, showing weakness.
• RSI: 25.8 — oversold territory, potential rebound zone.
• MACD: -5.50 — bearish momentum persists.
• Entry Zone: Attractive only near 120–125 ₹ if fundamentals stabilize.
• Long-Term Holding: Risky unless profitability improves and debt reduces significantly.

✅ Positive

• Strong brand portfolio with global franchises (KFC, Pizza Hut, Costa Coffee).
• DII holdings increased (+1.67%), reflecting domestic institutional support.
• Oversold RSI suggests potential short-term technical rebound.

⚠️ Limitation

• Negative PAT (-14.3 Cr.) and EPS (-0.14 ₹).
• High debt-to-equity ratio (1.59) raises solvency concerns.
• No dividend yield, limiting shareholder returns.

📉 Company Negative News

• Quarterly profit variation -1,505% indicates severe earnings deterioration.
• FII holdings reduced (-2.87%), showing weaker foreign investor sentiment.

📈 Company Positive News

• DII holdings increased (+1.67%), reflecting domestic institutional confidence.
• Strong franchise partnerships provide long-term brand strength.

🏭 Industry

• Industry PE at 123 — sector trades at very high valuations.
• QSR industry benefits from urbanization and rising consumer demand but faces margin pressures.

🔎 Conclusion

DEVYANI is highly leveraged with weak profitability and negative earnings, making current valuations unjustified. Entry is advisable only near 120–125 ₹, with cautious long-term holding. Improvement in profitability and debt reduction will be critical for sustainable upside.