Devyani International shares jump nearly 10% after upgrades; Analysts see up to 56% upside

Shares of Devyani International Ltd. gained as much as 9% on Thursday, February 5, as brokerages were positive on the company after it reported its third quarter earnings on Wednesday.

Devyani International's merger with Sapphire Foods, has resulted in shares of Sapphire Foods also gaining in line with the move seen in Devyani. Shares of Sapphire Foods also gained as much as 6%.

Brokerages Macquarie, Jefferies, Bernstein, Citi and Goldman Sachs have 'buy' and 'outperform' ratings on the stock (including an upgrade) and see up to a 56% potential upside on the stock from its previous closing price.

Macquarie

Macquarie has an 'outperform' rating on Devyani International, with a price target of ₹160 per share.

It said sustaining the pick-up in January's same store sales growth is key for the company.

Here's what it liked:

• Positive same store sales growth witnessed in January across formats, except Pizza Hut.


• Profitability improvement in recently acquired brands / Vaango with break-even in Biryani-by-Kilo format achieved before the March 2026 target.


• Healthy sequential gross margin recovery across formats, which Devyani expects to sustain.


• Healthy growth in international forms.

Here's what it did not like:

• The continued margin weakness across most formats in India.


• Higher India overheads, which the company expects this to stabilise at 5% of sales going forward.


• The cautious outlook on demand pick-up in January sustaining in the fourth quarter, given the history of false starts.

Jefferies

The analyst upgraded its rating on the stock to "buy" from "hold", with a price target of ₹145 per share.

It said that the elevation of Manish Dawar from CFO to CEO, with effect from April 2026 ensures leadership continuity, the brokerage expects the new CEO to take a hard look at business and put the franchise back on a sustainable growth path.

The analyst said the company's chairman also indicated that a Pizza Hut turnaround is underway. January 2026 also started on a positive note with for all brands, except Pizza Hut.

It said the merger announcement with Sapphire Foods may involve short-term uncertainty, but it views it as a long-term positive.

Bernstein

The brokerage has an "outperform" rating on Devyani International with a price target of ₹160 per share.

It said the new CEO begins a long road to recovery for the franchise.

The company reported a 12% increase in its consolidated revenue growth in the third quarter, with 40% growth due the recent acquisition of Sky Gate (Biryani by Kilo and Goila Chicken brands).

Its rest of the India business revenue growth continued to be weak, with KFC India increasing 6%, Pizza Hut declining 6%, Vaango increasing 3% and Franchisee brands increasing 9%.

However, the company's margins weakened across the board with higher delivery costs and de-leveraging impact.

Citi

Citi has a 'buy' rating on Devyani International, with a price target of ₹192 per share.

It said that KFC witnessed improvement in same store sales growth despite the partial shift of festive season from third quarter to second quarter.

Citi said the company's management has highlighted early signs of consumption improvement, which resulted in positive same store sales growth across all brands, except Pizza Hut, in January.

Initiative / experiments on promotions/deals and changes in strategy for online and offline business driving improvement in same store sales growth.

Biryani By Kilo achieved brand EBITDA break-even ahead of its target.

Goldman Sachs

The brokerage has a 'buy' rating on the stock with a price target of ₹160 per share.

Of the 26 analysts that have coverage on the stock, 18 have a 'buy' rating, three have a 'hold' rating and five have a 'sell' rating.

Shares of Devyani International are trading 9% higher on Thursday at ₹134. The stock is down 26% over the last 12 months.

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