DEVYANI - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 3.5

📊 Core Financials

Earnings & Profitability: PAT of ₹6.21 Cr this quarter marks a recovery from a loss of ₹13.3 Cr, but EPS remains negative at ₹–0.02, reflecting ongoing pressure on margins. ROCE at 7.53% and ROE at 2.20% are weak, indicating low capital efficiency.

Debt Profile: Debt-to-equity of 2.15 is high, which is typical for asset-heavy restaurant chains but adds financial risk.

Cash Flow: Not explicitly stated, but high debt and low ROE suggest tight cash flows. The company needs sustained profitability to improve liquidity.

💰 Valuation Indicators

Metric Value Insight

P/E Ratio Not available Likely due to negative EPS

P/B Ratio ~19.34 Extremely high premium over book value

PEG Ratio Not available Lack of reliable earnings growth data

Dividend Yield 0.00% No income play — reinvestment-focused

Valuation is difficult to justify given weak earnings and high leverage. The stock trades at a steep premium to book value, suggesting speculative optimism.

🍔 Business Model & Competitive Advantage

Devyani International Ltd. is India’s largest franchisee of Yum Brands, operating

KFC, Pizza Hut, and Costa Coffee outlets across India, Nepal, and Nigeria

A scalable QSR (Quick Service Restaurant) model with strong brand recall

Aggressive expansion strategy in Tier 2 and Tier 3 cities

Despite weak profitability, Devyani benefits from

Strong consumer brand affinity

High growth potential in India’s fast-food market

Strategic focus on delivery and digital channels

The company has delivered 44.3% quarterly revenue growth with a 1.7% profit margin

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. Analysts note its performance is “uncertain” but improving

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📈 Technical & Sentiment Indicators

RSI: 51.6 – Neutral zone, suggesting balanced momentum.

MACD: 3.75 – Mild bullish crossover.

Volume Dip – Below weekly average, indicating reduced participation.

DMA 50 & 200: Price is slightly above both, confirming short-term strength.

Short-term targets for 2025 range from ₹184 to ₹190.5, with stop-loss levels around ₹173–₹177

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💡 Investment Strategy

🔽 Entry Zone

Ideal Buy Range: ₹165–₹175, near DMA 200 and technical support.

Current Price ₹177: Within accumulation zone for high-risk investors.

🕰️ Long-Term Holding

Hold with Caution or Accumulate on Dips: Strong brand portfolio and QSR tailwinds make Devyani a potential long-term play, but weak ROE and high debt warrant caution.

Watch Earnings Consistency & Institutional Sentiment: FII outflow (−1.04%) and high valuation suggest short-term caution, while DII inflow (+1.22%) reflects domestic optimism.

You can explore Devyani’s financial analysis and valuation outlook

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or review its technical targets and stop-loss levels for 2025

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. Let me know if you'd like a peer comparison with Westlife Development or Sapphire Foods.

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stockpricearchive.com

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www.stocks-buy.com

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