Introduction

After Zomato and Burger King, now we have Devyani International Ltd, all set for its IPO.

Devyani International is the company behind brands like Pizza hut, KFC, Costa Coffee etc. in India.

With the overwhelming success of Zomato and the industry’s promising future, Devyani International can be a good bet. Here’s everything you need to know before subscribing to Devyani’s IPO.

 

About the company

Incorporated as a company in 1991, the company is one of the largest chain operators in QSR (Quick Service Restaurants) in India, and is the biggest franchise of Yum Brand in India.

 

Business Model

The business of Devyani Internationals is vertically classified into three:

  1. Core Brands

KFC, Pizza Hut and Costa Coffee are the core brands of Devyani. KFC and Pizza Hut being the franchise from Yum.

The company started its business relationship with Yum in 1997 and now it has 284 KFC stores and 317 Pizza Hut stores, in 26 states and three union territories in India as of June 2021.

The company has 44+ stores of Costa Coffee across India.

Core brands:

  1. KFC
  2. Pizza Hut
  3. Costa Coffee

Here is a table showing revenue from these three core brands:

KFC has been consistently giving the most revenue with around 56% in 2021 followed by 25% from Pizza Hut, while Costa Coffee contributes merely around 2% to the company’s revenue.

KFC and Pizza Hut are the two strong brands for this company and they’ve also been expanding their stores during COVID.

Also, Devyani International is largest QSR listed on Zomato and Swiggy.

  1. International Business

The company has stores in foreign countries like Nepal and Nigeria.

  1. Other Business

Other businesses include company’s own branded stores like Vaango, Food Street, Masala twist, Amreli etc.

Source: Chittorgarh

 

Financials:

If we look at the financials of the company, there has been decline in assets from 2020 to 2021. Revenue has increased though it was hit by COVID pandemic in 2020. The company is on losses but the losses have decreased in financial year 2020-21.

 

 

Competitive Strengths of Devyani

The major strengths of Devyani International are:

  • One of the largest brand in QSR
  • Largest franchisee of Yum brand in India.
  • KFC and Pizza hut are very well established brands. Also, since it is a multi-brand company, it helps in cross promotion (cross brand synergy)
  • The company has a very strong network of stores that is being continuously expanded by the company.
  • Opportunity in the market: There is good potential for QSR market in India as QSR holds 34% which is the highest in the Indian food industry.

 

 

Threat:

COVID

Company has been hit by the COVID pandemic as people would not go to dine out. The company continued its services with home delivery and is recovering. There is uncertainty regarding the impact COVID had on food habits of consumers.

Competition

Peer Competition like Jubiliant Foodworks. Also, the upcoming concept of cloud kitchen may prove to be a major threat for the company in future.

 

Real Estate

The reason real estate can be threat for the company is that all the land it has stores on is on lease. This lease is mostly 10-15 years and has to be renewed after this period. Now, not only the company has to bear the expenses of renewal, but also in case of failure of renewal either of the three conditions are to be fulfilled by the company as stated in its prospectus.

  • Fixed Rent
  • A portion of monthly revenue
  • Whichever is higher among (1) & (2)

 

 

Major Highlights of the IPO

  1. Promoters

Ravi Kant Jaipuria, Varun Jaipuria, and RJ Corp

  1. Object of the Issue:
  • Repayment and/or prepayment of company’s borrowings fully or partially.
  • General corporate purposes.
  1. Retail Investors: Only 10% allowed since it’s a loss making company
  2. IPO Dates:

Opening 4th August

Closing 6th August

  1. Type: Book built issue
  2. Listing on: NSE, BSE
  3. Issue Size: ₹1,838.00 Cr (including ₹1,398.00 Cr as offer for sale)
  4. Price Band: Rs.86 to Rs.90 per share
  5. Face Value: Rs.1 per share
  6. Lot Size: 165

 

 

Meta Description: All you need to know about DIL IPO. The company behind Pizza Hut & KFC is all set for its IPO on 4th August. With the overwhelming success of Zomato and the industry’s promising future, Devyani International can be a good bet.

 

 

Image source from: unsplash

 

 

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