Devyani’s YoY margin improves as sequential net profit falls 79.77%
Costs declined slower than revenue QoQ, while higher tax and thin pre-tax profit limited earnings.
Filed 02 Nov 2026, 11:55 IST · Devyani International Ltd (DEVYANI)
Key takeaways
- Consolidated revenue grew 10.36% YoY, while operating margin expanded 1.33 percentage points to 15.30%.
- Sequentially, revenue fell 3.87% and costs fell only 2.98%, narrowing operating margin by 0.78 percentage points.
- Net profit was Rs 3.46 cr as other income equalled 206.15% of pre-tax profit and the tax rate rose 13.78 percentage points QoQ.
Price around the results
Year-on-year growth did not carry through sequentially
Devyani’s consolidated revenue rose 10.36% YoY to Rs 1,519.42 cr, with expenses growing slower at 8.65%; this lifted operating profit 20.93%. Sequentially, revenue declined 3.87% and operating profit fell 8.51%, reflecting weaker momentum after the prior quarter. Pre-tax profit fell 75.17% QoQ to Rs 5.69 cr.
Lower costs were not enough to protect the quarterly margin
The sequential margin decline came because expenses fell 2.98%, slower than the 3.87% revenue decline, reducing operating margin by 0.78 percentage points. Interest expense fell 6.89% QoQ, but depreciation remained a significant charge at Rs 173.28 cr. Other income of Rs 11.73 cr represented 206.15% of pre-tax profit, so reported earnings were heavily reliant on non-operating income. The tax rate rose 13.78 percentage points QoQ to 39.16%, further limiting net profit.
Margin remains above the sector median despite the QoQ retreat
Operating margin improved 1.33 percentage points from a year earlier, but it declined from 16.08% in Q1FY27 to 15.30% in Q2FY27. The five-quarter trend shows volatility rather than a straight-line deterioration, with margins moving from 15.18% in Q1FY26 to 13.97%, 16.04%, 15.34%, 16.08% and then 15.30%. Devyani’s margin was 2.21 percentage points above the 13.09% median among 133 Consumer Discretionary peers that had reported.
Management links demand pressure to inflation and household budgets
Management said the company added 70 net new stores during the quarter, including 50 KFC stores in India, and that brand same-store sales growth was positive at 4% to 9% in India except Pizza Hut. It attributed the quarter’s pressure to raw-material and wage inflation, food and fuel inflation, household budget stress and disruptions from food-authority inspections. Management said the INR 99 Krisper meal was helping recruit new KFC customers and that cost management and sharper execution were being used to mitigate inflation. The company said it remains on track for 200–220 net new stores for the full year, while expecting discretionary spending to stay under pressure.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,519 cr | ₹1,581 cr | -3.87% | +10.36% |
| Other income | ₹12 cr | ₹19 cr | -39.06% | +137.93% |
| Expenses | ₹1,287 cr | ₹1,326 cr | -2.98% | +8.65% |
| Operating profit | ₹233 cr | ₹254 cr | -8.51% | +20.93% |
| Operating margin (%) | 15.30% | 16.08% | — | — |
| Interest | ₹65 cr | ₹70 cr | -6.89% | -5.11% |
| Depreciation | ₹173 cr | ₹180 cr | -3.92% | +11.66% |
| Profit before tax | ₹6 cr | ₹23 cr | -75.17% | — |
| Tax | ₹2 cr | ₹6 cr | -61.68% | — |
| Net profit | ₹3 cr | ₹17 cr | -79.77% | — |
| EPS (₹) | ₹0.00 | ₹0.12 | -100.00% | — |
Operating margin of 15.30% compares with a Consumer Discretionary sector median of 13.09% across 133 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Brand SSSG was positive at 4% to 9% in India, except Pizza Hut, which reported sequentially better numbers.
- Growth during the quarter was transaction-led and included growth in on-premise channel sales.
Guidance & outlook
- The company is on track to deliver 200–220 net new store additions for the full year.
- The company expects discretionary spending to remain under pressure in the coming quarters.
- The company expects the merger to receive approvals in line with its initial plans.
Expansion
- The company added 70 net new stores during the quarter.
- KFC added 50 net new stores in India during the quarter.
New products
- Pizza Hut launched the Triple Spice range, combining global and Indian tastes.
- BBK demonstrated new product development capabilities through Sattvik Biryani.
New initiatives
- The INR 99 Krisper meal is being used to recruit new KFC customers.
- The company is using cost management and sharper execution to mitigate inflation.
- The company plans to provide sharper entry-price value, consistent marketing and efforts to bring guests back to restaurants.
- The company’s plans for pre-merger preparation are progressing under its new management team.
Problems & risks
- Steep raw-material and wage inflation affected the business during the quarter.
- Food and fuel inflation, along with job losses from AI adoption, is putting pressure on household budgets.
- Food-authority inspections disrupted store operations during the quarter.
- Rising food inflation and interest rates are contributing to pressure on discretionary spending.
What to watch
- Whether operating margin recovers from 15.30% after the 0.78 percentage-point QoQ decline.
- Whether other income remains a large contributor after accounting for 206.15% of Q2FY27 pre-tax profit.
- Progress toward management’s stated 200–220 net new store additions for the full year.