Devyani returns to profit as operating margin rises to 16.08%
Revenue grew faster than expenses, but other income made up 83.99% of pre-tax profit.
Filed 29 Jul 2026, 11:55 IST · Devyani International Ltd (DEVYANI)
Key takeaways
- Consolidated operating margin expanded 0.74 percentage points QoQ as revenue growth of +10.00% outpaced expense growth of +9.03%.
- Net profit recovered to Rs 17.10 cr from a loss of Rs 9.84 cr QoQ, but other income accounted for 83.99% of pre-tax profit.
- Q1FY27 operating margin was 1.34 percentage points above the 14.74% median of 28 reported Consumer Discretionary peers.
Price around the results
Revenue recovery moved Devyani back into profit
Devyani reported consolidated revenue growth of +16.47% YoY and +10.00% QoQ, lifting operating profit growth to +23.37% YoY and +15.35% QoQ. Profit before tax moved to Rs 22.92 cr from a loss of Rs 18.12 cr in Q4FY26, while net profit returned to Rs 17.10 cr from a loss of Rs 9.84 cr. The improvement reflects both better operating performance and a favourable comparison with the loss-making prior quarter.
Cost growth supported margin, but profit quality remains mixed
Expenses grew +15.24% YoY against revenue growth of +16.47%, and +9.03% QoQ against revenue growth of +10.00%; this widened operating margin by 0.90 percentage points YoY and 0.74 percentage points QoQ. Management cited LPG, raw-material and wage-cost inflation as profitability pressures despite the margin improvement. Other income contributed 83.99% of pre-tax profit, while the tax rate rose 7.79 percentage points YoY to 25.38%, so the net-profit recovery was not driven by a lower tax rate.
Margin rebounded after the Q2 trough and beat sector median
Operating margin fell from 15.18% in Q1FY26 to 13.97% in Q2FY26, then recovered to 16.04% in Q3FY26, slipped to 15.34% in Q4FY26 and rose to 16.08% in Q1FY27. This quarter therefore marks a sequential rebound rather than a third straight decline. Devyani's margin was 1.34 percentage points above the 14.74% median for the 28 Consumer Discretionary peers that had reported.
Management points to dine-in execution and merger progress
Management said KFC delivered same-store sales growth of 3.3% and Costa Coffee delivered 10.2%, while Pizza Hut improved sequentially; it also said dine-in-focused offers were working as planned. The company said BBK added three net stores during the quarter and that its two-channel approach uses offline routes for recruitment and value, and online routes for convenience and access. Management said timelines for completing the Sapphire Foods merger remain broadly on track for the end of FY27, while demand has remained stable but faces below-normal season and El Niño risk.
Current market reaction is still pending
There is no immediate market reaction to these results yet. Across eight recent result-day reactions, the stock rose four times and fell four times, with a median absolute move of 2.30%, indicating a mixed historical response rather than a consistent direction.
Q1FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,581 cr | ₹1,437 cr | +10.00% | +16.47% |
| Other income | ₹19 cr | ₹14 cr | +36.52% | +43.98% |
| Expenses | ₹1,326 cr | ₹1,217 cr | +9.03% | +15.24% |
| Operating profit | ₹254 cr | ₹220 cr | +15.35% | +23.37% |
| Operating margin (%) | 16.08% | 15.34% | — | — |
| Interest | ₹70 cr | ₹70 cr | +0.06% | +5.03% |
| Depreciation | ₹180 cr | ₹182 cr | -1.17% | +20.49% |
| Profit before tax | ₹23 cr | ₹-18 cr | — | +679.59% |
| Tax | ₹6 cr | ₹-5 cr | — | +1019.23% |
| Net profit | ₹17 cr | ₹-10 cr | — | +666.82% |
| EPS (₹) | ₹0.12 | ₹-0.08 | — | +300.00% |
Operating margin of 16.08% compares with a Consumer Discretionary sector median of 14.74% across 28 peers that have reported Q1FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- KFC posted same-store sales growth of 3.3% in Q1 FY27, while Pizza Hut improved sequentially.
- Costa Coffee posted same-store sales growth of 10.2% in Q1 FY27.
Guidance & outlook
- The company targets completing the Sapphire Foods merger by the end of FY27.
- The company said demand remained stable, but warned of a below-normal season and El Niño risk.
Expansion
- BBK made three net store additions during Q1 FY27.
- The company acquired 105 Sky-Gate stores in June 2025.
New initiatives
- The company said its dine-in-focused strategy was working as planned.
- Dine-in-exclusive offers and campaigns delivered the desired results.
- The company is using offline channels for recruitment and value, and online channels for convenience and accessibility.
- The company is building a management and operational transformation called DIL 2.0.
Problems & risks
- The company cited cost inflation in LPG and a wage hike as pressures on profitability.
- The operating environment remained volatile and affected by seasonal complexities.
- The company reported small inflation in raw materials, LPG and wage costs.
What to watch
- Whether operating margin holds above 16.08% as LPG and wage-cost pressures continue.
- Whether KFC and Costa same-store sales growth moves from 3.3% and 10.2%, respectively.
- Whether profit becomes less dependent on other income than its current 83.99% share of pre-tax profit.