Devyani International Q4 Review - Growth Momentum Intact: Motilal Oswal
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Motilal Oswal Report
Omicron-led disruptions impacted operations of Devyani International Ltd. for four-to-six weeks in Q4 FY22, leading to ~8% miss on our sales and Ebitda forecasts, even as YoY growth was healthy on both fronts.
Average daily sales in March 2022 returned to pre-Covid-19 levels. Despite the raw material inflation, the management expects to maintain KFC’s brand contribution margin near 22% in FY23.
Devyani International raised prices by 8-9% in KFC in April 2022 and may take further hikes depending on the movement of input cost.
We believe quick service restaurants are a great play on the opening up theme, with healthy sales momentum and higher pricing power. Our channel checks indicated continued demand for QSRs in Apr-22, despite the price hikes.
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