Devyani margin slips as sequential costs outpace revenue
Consolidated margin was flat YoY, but the stock fell 3.08% over five sessions after the company reported another quarterly loss.
Filed 15 May 2026, 12:29 IST · Devyani International Ltd (DEVYANI)
Key takeaways
- Consolidated operating margin narrowed by 0.70 percentage points qoq as revenue fell 0.28% while expenses rose 0.55%.
- Despite revenue growth of +18.50% YoY, Devyani remained loss-making at Rs -9.84 cr as depreciation of Rs 182.48 cr and interest of Rs 70.10 cr absorbed operating profit.
- The stock fell 3.08% five sessions after the results, compared with a median absolute post-results move of 2.32% across its last eight reactions.
Price around the results
Sequential margin pressure offsets a year-on-year recovery
Consolidated revenue grew 18.50% YoY, but expenses rose at the same pace, leaving operating margin unchanged year-on-year. Sequentially, revenue fell 0.28% while expenses increased 0.55%, narrowing margin by 0.70 percentage points to 15.34%. The margin remained 0.53 percentage points above the 14.81% median for 93 Consumer Discretionary peers that had reported.
Depreciation and interest kept profit below zero
The loss was generated below the operating line: depreciation of Rs 182.48 cr and interest of Rs 70.10 cr more than absorbed operating profit of Rs 220.35 cr. Other income of Rs 14.10 cr partly offset those charges, but profit before tax was still Rs -18.12 cr. The tax rate fell by 6.87 percentage points qoq, while reported tax was Rs -4.74 cr, but net profit remained negative.
Store expansion continues alongside a management reset
The company added 217 net new stores in FY26 and ended the year with a global network of 2,256 stores. Management said KFC delivered its strongest performance in the last 14 quarters, with same-store sales growth of 4.9% during the quarter. Management said its priorities remain disciplined expansion, higher profitability, and deeper consumer engagement through innovation and digital initiatives. It also said the new management team should be largely in place by next quarter and described the proposed Sapphire Foods merger as a combination expected to unlock synergies.
The initial market reaction turned weaker than usual
The stock opened 1.26% higher but finished the results day up only 0.04%, then fell 1.70% after one session and 3.08% after five sessions. Its five-session relative performance was -3.20%. The reaction was weaker than the stock's typical post-results move, although its history remains mixed with three rises and five falls across eight results.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,437 cr | ₹1,441 cr | -0.28% | +18.50% |
| Other income | ₹14 cr | ₹-9 cr | — | +8.71% |
| Expenses | ₹1,217 cr | ₹1,210 cr | +0.55% | +18.50% |
| Operating profit | ₹220 cr | ₹231 cr | -4.64% | +18.47% |
| Operating margin (%) | 15.34% | 16.04% | — | — |
| Interest | ₹70 cr | ₹70 cr | +0.11% | +0.82% |
| Depreciation | ₹182 cr | ₹167 cr | +9.50% | +20.23% |
| Profit before tax | ₹-18 cr | ₹-15 cr | -21.61% | +18.93% |
| Tax | ₹-5 cr | ₹-5 cr | +3.66% | +15.05% |
| Net profit | ₹-10 cr | ₹-11 cr | +10.38% | +41.29% |
| EPS (₹) | ₹-0.08 | ₹-0.08 | +0.00% | — |
Operating margin of 15.34% compares with a Consumer Discretionary sector median of 14.81% across 93 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +0.04% | +0.24% |
| Next session | -1.70% | — |
| 5 sessions | -3.08% | -3.20% |
| 15 sessions | -6.38% | — |
| 30 sessions | -5.64% | — |
Volume on the results session was 0.86× its 20-day average.
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 delivered its strongest performance in the last 14 quarters during the quarter.
- KFC recorded positive same-store sales growth of 4.9% during the quarter.
Guidance & outlook
- The company expects to have the new management team largely in place by next quarter.
- The company’s priorities are disciplined expansion, stronger profitability, and deeper consumer relevance through innovation and digital engagement.
Expansion
- The company added 217 net new stores during FY26.
- The company ended the year with a global network of 2,256 stores.
- The proposed merger with Sapphire Foods is a strategic combination of two scaled-up and complementary platforms.
- The proposed merger is expected to unlock synergies, strengthen execution, and create a more agile and efficient organization.
New initiatives
- The company is transforming its management team under the leadership of its new CEO, Manish.
- Technology, automation, and data-led decision making will remain central to the company’s transformation.
- Value-led initiatives and accessibility-focused campaigns at KFC are improving consumer resonance.
Competition
- After the merger, the company expects the combined entity to be one of the largest global QSR platforms and Yum partners.
Problems & risks
- The company navigated a challenging operating environment during the year.
- External and seasonal factors remain fluid.
- The company reported that the LPG issue was effectively managed.
What to watch
- Whether consolidated operating margin holds above 15.34% after the 0.70-point qoq decline.
- Whether revenue resumes sequential growth after -0.28% qoq while expenses remain below the +0.55% qoq pace.
- Whether management's new team is largely in place by next quarter, as stated.