Devyani (DEVYANI) Q2 25/26 earnings summary

Executive summary

• Q2 FY26 saw consolidated revenue rise to INR 13,767.51 million, up 12.6% YoY, driven by continued store expansion, new product launches, and strong international growth despite external headwinds like unseasonal rains and festive impacts.

• Store network expanded with 30 new KFCs, 3 Pizza Huts, and 6 Tealive outlets; Tealive received positive feedback and Sky Gate integration is ongoing.

• Recent acquisitions, including Biryani By Kilo and Goila Butter Chicken, showed strong post-festive momentum; brand contribution break-even targeted by March 2026.

• Net loss for the quarter was INR 215.81 million, compared to a net profit of INR 24.22 million in the previous quarter and a net loss of INR 49.21 million YoY.

• Acquisition of 80.72% equity stake in Sky Gate Hospitality, increasing to 86.13% by quarter-end, with related businesses presented as discontinued operations.

Financial highlights

• Q2 FY26 consolidated revenues: INR 13,767.51 million, up 12.6% YoY; KFC India revenue: INR 5,723 million (+5.3% YoY); Pizza Hut India revenue: INR 1,860 million (flat YoY); International revenue: INR 4,495 million (+14% YoY).

• Gross profit reached INR 933 crores (10.1% YoY growth), with gross margin at 67.8%.

• Brand contribution margin declined to 11.7% (vs. 13.6% YoY), mainly due to Sky Gate consolidation; excluding Sky Gate, margin was 12.4%.

• Operating EBITDA (pre-IndAS) was INR 934 million (6.8% margin); reported EBITDA was INR 1,943 million (14.1% margin).

• PAT for Q2 FY26 was a loss of INR 239 million, compared to a profit of INR 175 million in Q2 FY25.

Outlook and guidance

• On track to achieve brand contribution break-even for Sky Gate by end of FY26; confident in future growth from recent acquisitions.

• Guidance to open 100-110 new KFC stores in India for the year; Pizza Hut expansion to remain muted.

• Thailand KFC to add 20-21 stores in the year, with future expansion to be optimized based on market studies.

• Positive initial results from GST 2.0 transition, with minimal impact on QSR business and benefits passed to consumers.