The largest franchisee of Yum Brands in India Devyani International is all set to hit the primary markets with its initial public offer (IPO) on Wednesday, August 4.
Started in 1991, it is today one of the largest operators of chain quick service restaurants in India. The company operates 696 stores on a ‘non-exclusive basis’ across 166 cities in India as of Jun 30’ 2021.
It operates brands such as KFC, Pizza Hut and Costa Coffee, has priced its IPO in the range of Rs 86-90 per share and looks to raise Rs 1,838 crore at the upper end of the price band. The IPO is mainly an offer for sale, with a fresh issue worth only Rs 440 crore, which it plans to utilise to repay debt worth Rs 324 crore.
Analysts have largely assigned a 'Subscribe' rating to the issue as they find the company's valuations compelling and believe the company is poised for long-term growth. Here are 7 reasons why you should subscribe to it:
A portfolio of well known global brands: Devyani International is the largest franchisee of Yum! Brands in India and has the right to operate KFC, Pizza Hut QSR chains in India. It also owns and operates the Costa Coffee franchise in India. Not just the Indian market, Devyani also operates KFC and Pizza Hut stores in Nepal and Nigeria. “Today, we operate 284 KFC, 317 Pizza Hut, and 44 Costa Coffee as of June,” shared Ravi Jaipuria, Chairman, RJ Corp during a press conference by pointing that around 95 per cent of the business that they do comes from these top brands.
Multi-dimensional player: Devyani International also owns and operates multiple home grown QSR brands; including south-Indian restaurant Vaango, fast food restaurant Food Street, Masala Twist, Juice Lounge Amreli and Ckrussh Juice Bar to name a few. These businesses contributes to remaining 5 per cent of the business.
Catering to a varied customer segment: Being present across all top major consumption categories; the brand in a way is catering to the need of a mix set of customers. With increase in disposal income, rising urbanization, more and more people now want to eat out. It is catering to younger crowds at its QSRs, health conscious people at it juice bars and families and occasional eaters at its restaurants like Vaango and Masala Twist.
High on expansion: According to experts, the value sales of QSRs grew by a CAGR of 5.5 per cent between 2015-2020 and are expected to grow at an even higher pace of 12.4 per cent in the coming years. Looking at the opportunity that this segment holds, Devyani is expanding its wing by opening more KFC, Pizza Hut and other brands outlet. The brand opened 109 stores of core business brands in FY 21 ending June. “Despite the pandemic we have continued to open store network and have opened 109 stores across core brand business in the last six month, ending March 31st 2021. During quarter ending June, 2021 we added 43 stores taking the total store count to 735,” added Jaipuria.
Good corporate governance: "We have 50 per cent independent board and are also conscious about CSR including GST,” added Jaipuria. The brand has also been focusing on hiring especially abled people at its restaurants including; KFC, Pizza Hut and Costa Coffee. “5 per cent of our workforce is dedicated to specially abled people,” pointed Virag Joshi, President & CEO, DIL.
Focusing on digital disruption: The QSR channel is continuously growing in India with rise in literacy, disposable income, global exposure, easy availability of things and proliferation of internet, added Jaipuria. Looking at the growth of this segment and more and more customers wanting to eat at home and preferring delivery over dine in during the pandemic, it moved Pizza hut from dine in to delivery and are focusing on digital portfolio. According to them, their delivery sales have increased to 70 per cent from 51 per cent in the previous years.
Food quality, safety is top priority: Focusing on food safety and quality have been top priority for DIL. Known for its lip smacking food and fresh ingredient and quality, DIL became one of the first restaurant company to incorporate contactless dine-in and delivery right after the pandemic. From ordering, food preparations, packaging to delivery; safety is maintained at each point.