Rolex Rings Limited Devyani International Limited - 14th September 2021
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Devyani International Limited
Rolex Rings Limited
Initiating
IPO Note Coverage 14th September
28th July 2021 2021Page 2
India Equity Institutional Research II SalesInitiating
Note Coverage II 14h September, 2021
Devyani International Limited Best pick on platter, Bon appetit
Company Snapshot
Recommendation Devyani International Limited or “DIL" is the largest franchisee of Yum Brands in India and is among the largest operators
of chain quick service restaurants (“QSR”) in India on a non-exclusive basis. DIL operates 696 stores across 166 cities in
CMP (INR) 115.1 India, as of June 30, 2021. In addition, DIL is a franchisee of the Costa Coffee brand in India, which is owned by Costa, and
operated 44 Costa Coffee stores as of June 30, 2021. DIL has other operations in the F&B industry, including stores of its
Target Price (INR) 151 own brands such as Vaango and Food Street. DIL also operates KFC and Pizza Hut stores in Nepal, and KFC stores in
Upside 25% Nigeria, on a non-exclusive sole franchisee basis.
Rating BUY
Sector QSR Outlook
Given the prevailing opportunities in QSR industry, change in delivery mechanism and DIL’s focus on implementation of
technology to increase footfall and improving operational efficiency, rightsizing stores, store expansion in new areas,
Market Data resulting into improving unit metrics and reduction of debt, we expect DIL to be a key beneficiary of the same.
Mkt Cap (INR Mn) 1,38,410 Long term drivers such as rising per capita income, changing consumer preference and food habits, young population,
52 Wk H/L (INR) 141.05/107.7 business culture and influence of western lifestyle are expected to drive growth of QSRs. Digital and delivery
Volume Avg (1m) 10,45,970 penetration which was already gaining momentum before the pandemic, was projected to take years is happening in just
months driving faster recovery.
Shares outs (Mn) 1202
Face Value (INR) 1 We Initiate Coverage on Devyani International Ltd. with a BUY rating for a target price of INR 151 per share valuing at
30x FY24E EV/EBIDTA giving 31% upside from current levels. DIL’s share price has corrected ~18% to its IPO listing price
which provides a good opportunity to buy the stock.
Shareholding Pattern (%) Key Financials
Post Particulars (INR Mn) FY19 FY20 FY21 FY22E FY23E FY24E
Particulars Pre-Issue
Issue Net Sales 13,106 15,164 11,348 15,459 21,919 28,265
Promoters 75.79% 67.99% EBITDA 2,790 2,555 2,269 3,030 4,625 5,964
Others 24.21% 32.01% PAT -593 -788 -813 -99 1,046 2,203
Total 100% 100%
EPS -0.75 -1.1 -0.5 -0.1 0.9 1.8
EBITDA Margin (%) 21.3% 16.8% 20.0% 19.6% 21.1% 21.1%
Source: KRChoksey Research
ANALYST KRChoksey Research Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Vikrant Kashyap, research2@krchoksey.com, +91-22-6696 5423 is also available on Bloomberg KRCS www.krchoksey.com
Thomson Reuters, Factset and Capital IQPage 3
India Equity Institutional Research II SalesInitiating
Note Coverage II 14h September, 2021
Investment Rationale
Presence across key consumption markets
DIL operates 696 stores across all brands and are present in 26 states and three union territories across 166 cities in India, as of June 30, 2021. DIL has strong presence
in key metro regions of Delhi NCR (comprising Faridabad, Ghaziabad, Gurgaon, Delhi and Noida), Bengaluru, Kolkata, Gurgaon, Mumbai and Hyderabad. Over the
years, DIL been consistently increasing the number of stores both organically and inorganically. With its cluster-based expansion approach, DIL has been able to
address demand in high-potential domestic markets.
Store expansion – key to drive growth
DIL operates franchises of several highly recognized global QSR brands and is the largest franchise partner for Yum in India. DIL is the non-exclusive sole franchisee for
KFC and Pizza Hut in Nepal, and for KFC in Nigeria and is also a franchisee for Costa Coffee in India. DIL continues to add stores in Core Brands (Pizza Hut – net addition
28 stores and KFC – net addition 92 stores in FY21). It continued to add stores in Q1FY22 in existing as well as new location despite several disturbances caused by
second wave of Covid -19. DIL added 40 stores in Q1FY22 and increased its presence from 155 cities in March 2021 to 166 cities in June 2021.
Improving Same Store Sales Growth (SSSG)
The SSSG has been impacted on account of COVID-19 but DIL has focused on improving the trend which is reflected in the performance of Core Brands Business in
Q4FY21. The SSSG of Pizza Hut and KFC shown recovery in later half of FY21 largely driven by delivery and take-away but Costa Coffee is yet to fully recover from the
impact of Covid-19 due to relative inconvenience of packaging liquid foods, consumption of these foods is restricted to dine-in and customer’s take-away.
Increase in delivery of foods driven by change in consumer preference
QSRs are seeing good recovery especially because of their inherent strength in delivery. Delivery now represents a larger portion of sales compared to the pre-COVID-
19 period. DIL carries out direct delivery and has also entered into tie-ups with delivery aggregators to accept delivery orders placed on their mobile applications.
Majority of the deliveries are carried out by delivery aggregators that provide end-to-end delivery solutions. Revenue generated from delivery sales represented 51.15%
of DIL’s revenue from operations in its Core Brands Business in FY2020 and increased to 70.20% of its revenue from operations in its Core Brands Business in FY2021 and
the trend is expected to continue in near future.
Experienced Promoters and management team with strong domain expertise
DIL benefits from an experienced and hands on promoter responsible for putting best-in-class processes, suitably supported by professional management team &
specialized employees. Ravi Kant Jaipuria, one of the Promoters and Non-Executive Director on the Board, has over three decades of experience in conceptualizing,
executing, developing and expanding food, beverages and dairy business in South Asia and Africa.
DIL’s operations are conducted by a well-qualified and experienced management team that has significant experience in all aspects of its business. Each brand DIL
operates has a dedicated team responsible for developing and delivering a superior brand experience. The management team is led by Whole-time Director (President
& CEO), Virag Joshi, who has been a key strategist in expansion of Pizza Hut, KFC, Costa Coffee stores from a small base of five restaurants in 2002 to over 600 stores
in the last 19 years.
ANALYST KRChoksey Research Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Vikrant Kashyap, research2@krchoksey.com, +91-22-6696 5423 is also available on Bloomberg KRCS www.krchoksey.com
Thomson Reuters, Factset and Capital IQPage 4
India Equity Institutional Research II SalesInitiating
Note Coverage II 14h September, 2021
S. No. Particulars Page No.
1 Company Overview 5
2 Industry Overview 8
3 Investment Rationale
a) Presence across key consumption markets 11
b) Store expansion – key to drive growth 11
c) Improving Same Store Sales Growth (SSSG) 12
d) Increase in delivery of foods driven by change in consumer preference 12
e) Experienced Promoters and management team with strong domain expertise 13
f) Continue to improve unit-level performance 13
Investment in technology and focus on digital capabilities
g) 13
4 Management 14
5 Financial Projections 15
6 Outlook and Valuation 16
7 Risk and Concerns 18
8 Consolidated Financials 19
ANALYST KRChoksey Research Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Vikrant Kashyap, research2@krchoksey.com, +91-22-6696 5423 is also available on Bloomberg KRCS www.krchoksey.com
Thomson Reuters, Factset and Capital IQPage 5
India Equity Institutional Research II SalesInitiating
Note Coverage II 14h September, 2021
Company Overview
Devyani International Limited or “DIL“ is the largest franchisee of Yum Brands in India and is among the largest operators of chain quick service restaurants in India,
on a non-exclusive basis, and operates 696 stores across 166 cities in India, as of June 30, 2021. DIL began its relationship with Yum in 1997, when the company
commenced operations of its first Pizza Hut store in Jaipur. DIL has subsequently continued to expand its operations with both KFC and Pizza Hut franchises, and as of
June 30, 2021, operated 284 KFC stores and 317 Pizza Hut stores across India. In addition, DIL is a franchisee of the Costa Coffee brand in India, which is owned by
Costa, and operated 44 Costa Coffee stores as of June 30, 2021. DIL has other operations in the F&B industry, including stores of their own brands such as Vaango and
Food Street.
DIL’s business is broadly classified into three verticals that includes stores of KFC, Pizza Hut and Costa Coffee operated in India (KFC, Pizza Hut and Costa Coffee
referred to as “Core Brands”, and such business in India referred to as the “Core Brands Business”); stores operated outside India primarily comprising KFC and Pizza
Hut stores operated in Nepal and Nigeria (“International Business”); and certain other operations in the F&B industry, including stores of their own brands such as
Vaango and Food Street (“Other Business”).
No of stores FY19 FY20 FY21 Q1FY22 No of stores (Core Brands) FY19 FY20 FY21 Q1FY22
Core Brands 469 504 605 645 Pizza Hut 268 269 297 317
International Business 33 35 37 NA KFC 134 172 264 284
Other Business 67 71 50 NA Costa Coffee 67 63 44 44
Source: KRChoksey Research Source: KRChoksey Research
In the Core Brands Business, DIL has extensive presence in 26 states and three union territories in India as of June 30, 2021. Yum! Brands Inc. operates brands such as
KFC, Pizza Hut and Taco Bell brands and has presence globally with more than 50,000 restaurants in over 150 countries, as of December 31, 20201.
Pizza Hut: DIL is the franchise partner of Yum for Pizza Hut in India. DIL’s first Pizza Hut store in India opened in 1997 at Jaipur. It was the first international
restaurant chain to develop a footprint in the region. As of June 30, 2021, DIL operated 317 Pizza Hut stores located in 20 states and three union territories, across
106 cities in India. Pizza Hut restaurants operate primarily in two formats, first being the Enhanced Dine-In for fine dine experience and second being Pizza Hut
Delivery, which provides the options of dine-in, carry out and delivery. In addition to the original pan pizza offering, DIL’s Pizza Hut stores have an extensive menu
featuring pizzas, pasta, beverages and desserts.
Pizza Hut (Year ending March) FY19 FY20 FY21 Pizza Hut (Year ending March) FY19 FY20 FY21
Brand Contribution (Store level Profit) 655.5 439.0 372.4
Revenue 4,233 4,174 2,879
Brand Contribution (% of revenue) 15.5% 10.5% 12.9%
YoY growth (%) 8.6% -1.4% -31.0% Average daily sales per store (in INR) 44,679.3 43,917.6 34,900.4
Average daily transaction per store 93.8 94.1 65.8
Gross margin 3,131 3,126 2,135
Average transaction size (in INR) 476.3 467.0 530.2
Gross margin (%) 74.0% 74.9% 74.1% Same Store Sales Growth (SSSG) 4.7% -3.7% -30.3%
Source: KRChoksey Research Source: KRChoksey Research
ANALYST KRChoksey Research Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Vikrant Kashyap, research2@krchoksey.com, +91-22-6696 5423 is also available on Bloomberg KRCS www.krchoksey.com
Thomson Reuters, Factset and Capital IQPage 6
India Equity Institutional Research II SalesInitiating
Note Coverage II 14h September, 2021
Company Overview
KFC: DIL is the franchise partner of Yum for KFC in India and is the only franchise partner for KFC in Nepal and Nigeria, through its subsidiaries. KFC is the world’s No.1
Chicken QSR restaurant and has industry leading stature across many countries like the UK, Australia, South Africa, China, USA, Malaysia and India. The first KFC store
in India opened in 2005 at Kolkata. As of June 30, 2021, DIL operated 284 KFC stores located in 21 states and two union territories, across 107 cities in India. DIL’s KFC
stores have an extensive menu featuring fried chicken buckets and allied chicken products, grilled chicken, burgers, rice bowls, and beverages.
KFC (Year ending March) FY19 FY20 FY21 KFC (Year ending March) FY19 FY20 FY21
Brand Contribution (Store level Profit) 853.7 972.7 1,181.7
Revenue 4,641.1 6,091.3 6,442.6
Brand Contribution (% of revenue) 27.9% 24.6% 27.1%
YoY growth (%) 31.1% 31.2% 5.8% Average daily sales per store (in INR) 1,13,851.6 1,16,740.4 1,00,269.9
Average daily transaction per store 284.0 285.6 197.2
Gross margin 3,064.3 3,949.7 4,360.2
Average transaction size (in INR) 400.9 408.8 508.4
Gross margin (%) 66.0% 64.8% 67.7% SSSG 4.7% 3.2% -33.7%
Source: KRChoksey Research Source: KRChoksey Research
Costa Coffee: DIL’s first Costa Coffee store in India opened in 2005 at Delhi. As of June 30, 2021, DIL operated 44 Costa Coffee stores located in eight states and
one union territory, across 17 cities in India. DIL currently operate two formats of Costa Coffee stores - full retail stores at high-street locations and malls, and
branded kiosks at airports, hospitals and food courts at highways. DIL’s Costa Coffee stores have an extensive menu featuring coffee, sandwiches, wraps, Indian
snacks, desserts, and other beverages.
Costa Coffee (Year ending March) FY19 FY20 FY21 Costa Coffee (Year ending March) FY19 FY20 FY21
Brand Contribution (Store level Profit) 181.7 174.1 33.2
Revenue 902.0 819.6 214.0
Brand Contribution (% of revenue) 26.2% 27.5% 19.8%
YoY growth (%) 3.6% -9.1% -73.9% Average daily sales per store (in INR) 37,458.4 37,413.6 18,510.1
Average daily transaction per store 123.1 117.3 57.8
Gross margin 693.4 634.0 168.0
Average transaction size (in INR) 304.4 319.1 320.2
Gross margin (%) 76.9% 77.3% 78.5% SSSG 2.7% -4.4% -61.6%
Source: KRChoksey Research Source: KRChoksey Research
ANALYST KRChoksey Research Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Vikrant Kashyap, research2@krchoksey.com, +91-22-6696 5423 is also available on Bloomberg KRCS www.krchoksey.com
Thomson Reuters, Factset and Capital IQPage 7
India Equity Institutional Research II SalesInitiating
Note Coverage II 14h September, 2021
Company Overview
International Business: The international journey for DIL started in 2009 with opening of stores in Nepal and Nigeria. As of June 30, 2021, DIL has 37 stores of its
Core Brands in Nepal and Nigeria, comprising 34 KFC stores and three Pizza Hut stores. DIL operates KFC and Pizza Hut stores in Nepal, and KFC stores in Nigeria, on
a non-exclusive sole franchisee basis. In Nepal DIL operates both YUM brands i.e. KFC & Pizza Hut, whereas in Nigeria DIL only operate KFC.
International Business (Year ending International Business (Year ending
FY19 FY20 FY21 FY19 FY20 FY21
March) March)
No of stores at the beginning of the % of total % of total % of total
32 33 35 Amount Amount Amount
period Int Int Int
(INR Mn) (INR Mn) (INR Mn)
Addition 1 2 3 revenue revenue revenue
Nigeria 763.6 69.2% 1,131.5 75.9% 932.3 80.8%
Closed 0 0 1
Nepal 340.1 30.8% 359.5 24.1% 221.3 19.2%
No of stores at the end of the period 33 35 37 Total 1,103.7 100.0% 1,491.1 100.0% 1,153.6 100.0%
Source: KRChoksey Research Source: KRChoksey Research
Revenue from the Core Brands Business, together with the International Business, represented 83.01%, 82.94% and 94.19% of DIL’s revenue from operations in fiscals
2019, 2020 and 2021, respectively. DIL has been consistently expanding its store network over the years. Stores in its Core Brands Business grew at a CAGR of 13.58%
from 469 stores as of March 31, 2019 to 605 stores as of March 31, 2021, and had 645 stores as of June 30, 2021. Despite the ongoing COVID-19 pandemic, DIL has
continued to expand its store network and in the six months ended March 31, 2021, DIL opened 109 stores in the Core Brands Business.
Other Business: In addition to the Core Brands Business and International Business, DIL operates stores of other brands such as Vaango, The Food Street, Ile Bar,
AMRELI, Ckrussh Juice Bar, among others. DIL typically operates these in the form of outlets within larger food courts in malls and airports. DIL launched its own brand
‘Vaango’, a south Indian QSR chain in 2011. The first Vaango outlet in India opened in 2011, at Noida. As of June 30, 2021, DIL operated 27 Vaango outlets located in eight
states and one union territory, across 15 cities in India.
In Fiscal 2019, 2020 and 2021, DIL opened 12, 11 and 2 new Vaango outlets in India. Vaango outlets are generally located in food courts in malls and shopping complexes.
DIL also operate food courts, restaurants and bars for brands such as ‘The Food Street’, ‘Ckrushh’, ‘Ile Bar’, among others. DIL operates these outlets across food
courts at airports, malls, highways, and hospitals. As of March 31, 2019, 2020 and 2021, DIL had 64, 71 and 50 stores, respectively, of other brands under Other Business.
As of June 30, 2021, DIL had 51 stores of other brands under its Other Business.
ANALYST KRChoksey Research Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Vikrant Kashyap, research2@krchoksey.com, +91-22-6696 5423 is also available on Bloomberg KRCS www.krchoksey.com
Thomson Reuters, Factset and Capital IQPage 8
India Equity Institutional Research II SalesInitiating
Note Coverage II 14h September, 2021
Industry Overview
The Indian food service industry witnessed multi-fold growth in the last decade largely due to changing consumer patterns, increase in eating out trends and growing
market proliferation of brands in India. The Indian food services industry was estimated at INR 8,366 billion in FY 2019-20. The market is projected to grow at a CAGR of
15.5% over the next five years and is expected to reach INR 17,220 billion by FY 2024-25. Factors such as Rising per capita income, increasing internet penetration,
urbanization, changing consumer preference and food habits, young population, business culture and western lifestyle are expected to play key role in growth of the
industry. The rise in the number of transactions, which grew at a CAGR of 2.4% during the last five years, was one of the key reason for growth in the industry. The
number of transactions is expected to grow by an even higher rate of 6.9% in the period between 2020 and 2025.
Aggregators to play key role in the ecosystem: Food delivery applications, such as Zomato and Swiggy, have played vital role in the recent past and are
expected to play an even more prominent role, as a large share of consumers will continue to prefer the convenience of home deliveries. The pandemic has amplified
the role of food delivery providers in the ecosystem. DIL is among the single largest QSR companies in India that is listed on the Swiggy platform, and is among the
largest QSR companies in India listed on the Zomato platform in CY 2019 and 2020.
Historically, the quick-service restaurant (QSR) channel recorded the fastest growth among all foodservice channels, at a CAGR of 5.5% from 2015 to 2020. Their ability
to provide affordable meals, with a quick service time, helped them register significant growth during this period. Global chains, such as KFC, McDonald’s, and Burger
King, have invested in expanding their presence in the market.
The quick-service restaurant channel has been rapidly growing in popularity in India, owing to factors such as rise in literacy, exposure to media, increase in disposable
incomes, and easier and greater availability. Affordability has also been a key factor. In 2020, the QSR channel made the largest contribution to the foodservice
industry, with a sales share of 34.1%. This was followed by pub, club, and bar, and full-service restaurants, with market shares of 27.1% and 15.5% respectively.
Indian Food Service Sector - Value and Share by Channel (Year 2020) Indian Food Service Sector - Value Growth by Channel (Historic growth
3,000.0 40.0% 2015-20 and Future growth 2020-25)
25.0%
2,500.0 34.1% 35.0% 20.2%
30.0% 20.0% 18.0% 17.7%
2,000.0 27.1% 16.0% 15.0%
25.0%
1,500.0 20.0%
15.0% 12.4%
2,854.8
2,268.0 15.5% 15.0% 10.0%
1,000.0 8.8% 10.0%
1,299.9 5.2% 5.2% 4.1%
500.0 5.0%
431.9 431.2 341.2 739.4 5.0% 5.5% 3.9% 2.5%
0.0 0.0% 0.0%
-5.0%
-0.8% -1.9% -1.7%
QSR Pub, Club & Bar FSR Leisure Accomodation Coffee & Tea
Sales Value (INR billion) Market Share (In %) Historic growth Future growth Shop
Source: Company, KRChoksey Research Source: Company, KRChoksey Research
ANALYST KRChoksey Research Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Vikrant Kashyap, research2@krchoksey.com, +91-22-6696 5423 is also available on Bloomberg KRCS www.krchoksey.com
Thomson Reuters, Factset and Capital IQPage 9
India Equity Institutional Research II SalesInitiating
Note Coverage II 14h September, 2021
Industry Overview
The QSR channel leads the industry in terms of the number of outlets in 2020, at an outlet count of 1,995,104. The total number of outlets in the channel grew by a
CAGR of 2% between 2015 and 2020; the rate is the highest among all foodservice channels. The QSR channel is expected to lead the foodservice industry in terms of
growth in the number of outlets between 2020 and 2025, at an expected CAGR of 6.5%.
Indian Food Service Sector – Outlet by Channel (Year 2020)
Indian Food Service Sector – Outlet growth by Channel
25,00,000 Pub, Club & Bar 0.5% 1.9%
19,95,104
20,00,000 Coffee & Tea Shop 0.1% 1.4%
15,00,000
Accomodation 0.7% 2.1%
FSR 1.6% 2.6%
10,00,000
3,39,117 3,23,011 2,50,561
Mobile Operator 0.7% 1.4%
5,00,000 2,17,003 2,08,248
QSR 2.0% 6.5%
0
QSR Mobile FSR Accomodation Coffee & Tea Pub, Club & Bar 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0%
Operator Shop
Future growth (CAGR 2020-25) Historic growth (CAGR 2015-20)
Source: Company, KRChoksey Research Source: Company, KRChoksey Research
Indian QSR channel grew by a CAGR of 5.5% to amount to INR 2,854.8 billion in 2020 from INR 2,189.2 billion in 2015. While the number of transactions grew by 3.8%,
number of outlets grew by 2%. Home deliveries played a key role in pushing the number of transactions. Over the next five years, the value sales of quick-service
restaurants is expected to grow at an even higher pace of 12.4%, indicating a steep rebound in these outlets post the pandemic.
The year 2020 saw significant changes in the business operations of QSRs. Contactless dining experiences and takeaways were adopted by restaurants, with the help
of technology. For instance, Pizza Hut, when it opened restaurants during the ‘unlock’ phase of the pandemic, enabled consumers to order using QR codes on their
tables, through which they could order online. The channel is also focused on modifying their menus according to changing global trends and Indian eating habits.
KFC also, in May 2020, introduced contactless takeaways from its restaurants. In response to COVID-19 pandemic, KFC and Pizza Hut were among the earliest brands in
India to roll out contactless delivery and consumers have been able to place an order that is prepaid on the KFC application, mSite, and website and walk into a KFC
outlet to pick up the order. As the pandemic is still ongoing, contactless dining and deliveries will be priorities into 2021 as well. Similar to 2020, the year is likely to see
more fast-food outlets adopting QR code-enabled menus.
ANALYST KRChoksey Research Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Vikrant Kashyap, research2@krchoksey.com, +91-22-6696 5423 is also available on Bloomberg KRCS www.krchoksey.com
Thomson Reuters, Factset and Capital IQPage 10
India Equity Institutional Research II SalesInitiating
Note Coverage II 14h September, 2021
Industry Overview
Coffee and Tea Shops: The coffee tea shop channel was worth INR 341.2 billion in 2020 registering a negative CAGR of -1.7% between 2015 and 2020. The virus
outbreak was one of the main reasons for the decline in the channel’s value during the review period. The channel represents only 4.1% of the Indian foodservice profit
sector value. Indian coffee and tea shop market is expected to grow at a CAGR of 15.0% to reach a valuation of INR687.4 billion in 2025. Key players in this segment
include Costa Coffee, Chai Point, Barista, Starbucks and Café Coffee Day.
Increasing the average transaction price will drive future value growth as key operators compete for quality and innovation rather than price. With average transaction
prices of the channel currently being the lowest of any foodservice channel, operators can look to add unique and indulgent food and drinks to the menu to gain
premium positioning and increase average transaction prices.
Demand for higher quality tea, coffee, and coffee beans has gained popularity in recent years. As consumers’ expectations of on-premises coffee continues to rise,
operators are also offering capsules and roasted coffee products for home consumption. India has largely been a tea drinking country. At the turn of the twentieth
century, however, coffee has become a more popular drink. It is now a refreshing and trendy beverage, rather than a traditional drink. The high price point associated
with coffee compared to tea has driven the channel's sales.
Despite its still small size, the channel is expected to have a noticeable impact on foodservice. Coffee chains, both local and foreign, are likely to grow their footprint
significantly in coming years. The rising demand from the young population, rapid urbanization, business culture, and western lifestyle can be attributed to the
coffee and tea shop's future growth. Further, an increase in the number of dual-income families, increasing global exposure, growing media penetration would all lead
to the growth of coffee and tea shops in India.
Impact of Pandemic and way forward: The pandemic has devastating effect on food service industry , the footfall fell precipitously but QSR segment was first to
recover. Increase take away, drive through and delivery helped the industry to recover faster. The prevalence of home delivery in the Indian QSR industry is expected
to continue to grow due to changing lifestyles and changing consumer eating patterns in the post-COVID atmosphere. Digital and delivery penetration was already
gaining momentum before the pandemic. Now, a transformation that was projected to take years is happening in just months.
Most key brands have seen increased online orders, higher deliveries and take away which seems to be a new normal. The pandemic accelerated the growth of online
food ordering through food delivery apps, as consumers turned to online platforms to avoid spreading or being infected by the virus in public places. Increasing
internet and mobile penetration in India and the advent of food delivery apps are also key factors leading consumers away from traditional dine-in experiences and
towards convenience-driven options.
Most of the QSRs have large number of stores in malls where footfalls are low and there are uncertainties around recovery in footfalls. With increased vaccination and
gradual opening up of economy, brands are hopeful of increase in footfalls at malls and recovery in dine-ins. QSRs will see a better recovery compared to other
channels, owing to their better suitability for take-away. Going forward, the investments in expansion of stores and technology will also drive the growth. Apart
from it, recovery of income levels of consumers, rise in work from anywhere culture, menu innovation and demand from urban consumer will help recovery in near
future.
ANALYST KRChoksey Research Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Vikrant Kashyap, research2@krchoksey.com, +91-22-6696 5423 is also available on Bloomberg KRCS www.krchoksey.com
Thomson Reuters, Factset and Capital IQPage 11
India Equity Institutional Research II SalesInitiating
Note Coverage II 14h September, 2021
Investment Rationale
Presence across key consumption markets
DIL operates 696 stores across all brands and are present in 26 states and three union territories across 166 cities in India, as of June 30, 2021. DIL has strong presence
in key metro regions of Delhi NCR (comprising Faridabad, Ghaziabad, Gurgaon, Delhi and Noida), Bengaluru, Kolkata, Gurgaon Mumbai and Hyderabad. Over the years,
DIL been consistently increasing the number of stores both organically and inorganically. With its cluster-based expansion approach, DIL has been able to address
demand in high-potential domestic markets.
Presence – Top 5 cities (Core Brands) Region-wise no of outlets (Core Brands)
No of stores FY19 FY20 FY21
188
Bengaluru 23 30 80
New Delhi 67 70 54 254
North East
Kolkata 39 39 42
West South
Gurgaon 35 34 34
Noida 30 29 28 47
Total 194 202 238 116
Source: KRChoksey Research Source: KRChoksey Research
Store expansion – key to drive growth
DIL operates franchises of several highly recognized global QSR brands and is the largest franchise partner for Yum in India. DIL is the non-exclusive sole franchisee for
KFC and Pizza Hut in Nepal, and for KFC in Nigeria and is also a franchisee for Costa Coffee in India. DIL continues to add stores in Core Brands (Pizza Hut – net
addition 28 stores and KFC – net addition 92 stores in FY21). It continued to add stores in Q1FY22 in existing as well as new location despite several disturbances caused
by second wave of Covid -19. DIL added 40 stores in Q1FY22 and increased its presence from 155 cities in March 2021 to 166 cities in June 2021.
Pizza Hut (Year ending March) FY19 FY20 FY21 KFC (Year ending March) FY19 FY20 FY21
Stores at the beginning of the year 244 268 269 Stores at the beginning of the year 99 134 172
Addition 35 15 57 Addition 25 31 50
Acquired 0 0 0 Acquired 13 9 51
Closed 11 14 29 Closed 3 2 9
Stores at the end of the year 268 269 297 Stores at the end of the year 134 172 264
Source: KRChoksey Research Source: KRChoksey Research
ANALYST KRChoksey Research Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Vikrant Kashyap, research2@krchoksey.com, +91-22-6696 5423 is also available on Bloomberg KRCS www.krchoksey.com
Thomson Reuters, Factset and Capital IQPage 12
India Equity Institutional Research II SalesInitiating
Note Coverage II 14h September, 2021
Investment Rationale
Improving Same Store Sales Growth (SSSG): The SSSG has been impacted on account of COVID-19 but DIL has focused on improving the trend which is
reflected in the performance of Core Brands Business in Q4FY21. The SSSG of Pizza Hut and KFC shown recovery in later half of FY21 largely driven by delivery and
take-away but Costa Coffee is yet to fully recover from the impact of Covid-19 due to relative inconvenience of packaging liquid foods, consumption of these foods is
restricted to dine-in and customer’s take-away.
SSSG for Core Brands Business
SSSG(%) SSSG(%) Q4
Brand Contribution (INR in Mn) 2018-19 2019-20 2020-21
2020-21
Same Store Sales Growth
Q4 2020-
2018-19 2019-20 2020-21 KFC 854 973 1182 575
21
KFC 4.7% 3.2% -33.7% 19.6% Pizza Hut 655 439 372 157
Pizza Hut 4.7% -3.7% -30.3% 13.4% Costa Coffee 182 174 33 26
Costa Coffee 2.7% -4.4% -61.6% -24.9% Brand Contribution - Core Brands Business 1,691 1,586 1,587 758
Source: KRChoksey Research
Source: KRChoksey Research
Increase in delivery of foods driven by change in consumer preference
QSRs are seeing good recovery especially because of their inherent strength in delivery. Delivery now represents a larger portion of sales compared to the pre-COVID-
19 period. DIL carries out direct delivery and has also entered into tie-ups with delivery aggregators to accept delivery orders placed on their mobile applications.
Majority of the deliveries are carried out by delivery aggregators that provide end-to-end delivery solutions. Revenue generated from delivery sales represented 51.15%
of DIL’s revenue from operations in its Core Brands Business in FY2020 and increased to 70.20% of its revenue from operations in its Core Brands Business in FY2021 and
the trend is expected to continue in near future.
ANALYST KRChoksey Research Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Vikrant Kashyap, research2@krchoksey.com, +91-22-6696 5423 is also available on Bloomberg KRCS www.krchoksey.com
Thomson Reuters, Factset and Capital IQPage 13
India Equity Institutional Research II SalesInitiating
Note Coverage II 14h September, 2021
Investment Rationale
Experienced Promoters and management team with strong domain expertise
DIL benefits from an experienced and hands on promoter responsible for putting best-in-class processes, suitably supported by professional management team &
specialized employees. Ravi Kant Jaipuria, one of the Promoters and Non-Executive Director on the Board, has over three decades of experience in conceptualizing,
executing, developing and expanding food, beverages and dairy business in South Asia and Africa.
DIL’s operations are conducted by a well-qualified and experienced management team that has significant experience in all aspects of its business. Each brand DIL
operates has a dedicated team responsible for developing and delivering a superior brand experience. The management team is led by Whole-time Director
(President & CEO), Virag Joshi, who has been a key strategist in expansion of Pizza Hut, KFC, Costa Coffee stores from a small base of five restaurants in 2002 to
over 600 stores in the last 19 years.
Continue to improve unit-level performance
The management believes that with further cost efficiencies DIL will be able to expand its store level profitability and Brand Contribution Margins. The growth of its
stores will allow DIL to apportion fixed overheads costs such as brand building and administrative expenses across its store network which will improve the Brand
Contribution Margins. DIL has been able to rationalize certain stores that were loss-making to improve its overall store level profitability. Store rationalization will also
help improve the margins going forward. The continued food innovation and value proposition will help enhance its unit level performance by driving order frequency
and order ticket size. Going forward, DIL intends to work with Yum to re-engineer its menus and introduce high margin offerings aligned to target groups for home
consumption.
Investment in technology and focus on digital capabilities
DIL will continue to invest in technology to maintain its competitive advantage. The company will focus on improving its overall technology infrastructure including
digital and delivery capabilities. DIL plans to increase its investment in end-to-end digitalization, automation, artificial intelligence and machine learning, to connect
online traffic with its offline assets effectively. DIL is working with Yum to improve its technology platform and further integrate its systems with Yum’s platform to
ensure greater operational efficiency.
ANALYST KRChoksey Research Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Vikrant Kashyap, research2@krchoksey.com, +91-22-6696 5423 is also available on Bloomberg KRCS www.krchoksey.com
Thomson Reuters, Factset and Capital IQPage 14
India Equity Institutional Research II SalesInitiating
Note Coverage II 14h September, 2021
Management
Ravi Kant Jaipuria, Chairman and Non-Executive Director
Ravi Kant is a promoter of the Company and has over three decades of experience in conceptualizing, executing, developing and expanding food, beverages and dairy
business in South Asia and Africa. He has an established reputation as an entrepreneur and a business leader and has received PepsiCo’s award for International
Bottler of the Year, awarded in 1997.
Varun Jaipuria, Non-Executive Director
Varun attended Millfield School, Somerset, England and attended a degree course in international business from the Regent’s University, London. He has 12 years of
experience in the soft drinks industry and has also completed a program for leadership development at the Harvard Business School. He has been a Director on the
Board since November 13, 2009.
Raj Pal Gandhi, Non-Executive Director
Raj Pal has over 28 years of experience with one of the group companies (Varun Beverages Limited) and has been instrumental in strategizing the company’s
diversification, expansion, mergers and acquisitions, capex funding and institutional relationship.
Virag Joshi , Whole-time Director (President & CEO)
Virag has been a key strategist in expansion of Pizza Hut, KFC, Costa Coffee outlets from a small base of five restaurants in 2002 to 600 plus outlets in last 19 years. He
has been earlier associated with Indian Hotels Company Limited, Domino’s Pizza India Limited, Milkfood Limited, and Priya Village Roadshow Limited.
Manish Dawar, Whole-time Director and Chief Financial Officer
Manish is a Chartered Accountant and a member of the Institute of Company Secretaries of India. He has wide experience in various industry domains and across
various geographies in the world. He has worked in various corporate setups including Reebok India, Reckitt Benckiser, Vedanta, DEN Networks Limited, and
Vodafone India Limited.
Naresh Trehan, Independent Director
Naresh holds a bachelor’s degree in medicine and surgery from the University of Lucknow and has been certified as a thoracic and cardiac surgeon by the American
Board of Thoracic Surgery. He has received the Padma Bhushan Award in 2001, presented by the Government of India. Naresh has been a Director on the Board since
April 21, 2021.
ANALYST KRChoksey Research Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Vikrant Kashyap, research2@krchoksey.com, +91-22-6696 5423 is also available on Bloomberg KRCS www.krchoksey.com
Thomson Reuters, Factset and Capital IQPage 15
India Equity Institutional Research II SalesInitiating
Note Coverage II 14h September, 2021
Financial Projections
Revenue
We expect DIL to clock a healthy 16.6% revenue CAGR over FY19-FY24E, and expect revenue to touch INR 28,265 Mn. in FY24E from INR 13,106 Mn. in FY19. We expect
revenue to see sharp jump from later half of FY22E as increased efforts toward vaccination and safety will restore confidence in consumers. We expect growth to
come from focus on implementation of technology to increase footfall, new store expansion, improvement in same store sales growth, increased footfall in malls,
increased delivery and take-away and recovery in dine-in.
30000 60%
36% 42% 40%
20000 29%
18% 16% 20%
28,265
21,919 0%
10000 -25%
13,106 1516,4 15,459 -20%
1134,8
0 -40%
2019 2020 2021 2022E 2023E 2024E
Revenue % growth YoY
Source: KRChoksey Research
EBITDA and EBITDA margin
We expect DIL to report 16.4% EBITDA CAGR over FY19-FY24E and EBIDTA margins to remain at the 21%. EBITDA in absolute terms is expected to reach INR 5,964 Mn.
in FY24E from INR 2,790 Mn. in FY19. The improvement in margin is largely driven by improving operational efficiency, rightsizing stores, store expansion in new
areas, focus on improving unit metrics and reduction of debt.
8000 25%
21% 20% 21% 21% 20%
6000 20%
17%
15%
4000
5,964 10%
2000 4,625
2,790 2,555 3,030 5%
2,269
0 0%
2019 2020 2021 2022E 2023E 2024E
Source: KRChoksey Research EBIDTA Margin (%)
ANALYST KRChoksey Research Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Vikrant Kashyap, research2@krchoksey.com, +91-22-6696 5423 is also available on Bloomberg KRCS www.krchoksey.com
Thomson Reuters, Factset and Capital IQPage 16
India Equity Institutional Research II SalesInitiating
Note Coverage II 14h September, 2021
Outlook and Valuation
We expect favourable economic scenario for businesses and economy after the pandemic recedes. Factors such as Rising per capita income, increasing internet
penetration, urbanization, changing consumer preference and food habits, young population, business culture and western lifestyle are expected to play key role in
growth of the industry. Digital and delivery penetration was already gaining momentum before the pandemic. Now, a transformation that was projected to take
years is happening in just months driving faster recovery.
Launch of 5G to boost online orders across geographies: The launch of 5G technology will boost the internet penetration in urban as well as rural India which
will lead to higher online ordering which augurs well for QSR players like Devyani International given their increased focus on delivery which has already reached to
70% in FY21 and it is further expected to increase despite recovery in dine-in.
Recovery in footfall at malls to improve SSSG: QSRs have sizeable presence in malls which has severely impacted due to outbreak of Covid-19. The footfall at
malls were initially tepid but it is gradually improving across geography which is good sign for players like DIL. The same store sales growth of DIL is expected to
improve as the restrictions around dine-in further eases.
Store rollout in new areas will improve revenue visibility: DIL intends to increase the store network by implementing its defined new-store roll out process
and its cluster approach and penetration strategy with respect to store location, while aiming to achieve an optimal mix across different types of restaurant formats
in order to drive footfalls and compete effectively. As DIL expands its store network, the company also intends to expand in new areas and markets where there is
strong potential for growth.
Focus on digitization to improve traffic: DIL plans to increase its investment in end-to-end digitalization, automation, artificial intelligence and machine
learning, to connect online traffic with its offline assets effectively. The company is working with Yum to improve its technology platform and further integrate its
systems with Yum’s platform to ensure greater operational efficiency.
DIL’s topline in FY21 has been impacted, in-line with the industry, largely due to Covid-19 as QSRs are either closed entirely or operating on a limited basis, offering
only takeout, pickup, delivery, drive-through, or some combination of those options. Revenues from operations for FY 21 have come in at INR 11348 Mn, compared to
INR 15164 Mn and INR 13106 Mn for FY20 and FY19 respectively. EBITDA margin were also lower at 15.8% in FY21 compared to 16.6% and 19.4% respectively for the
corresponding periods.
DIL, however, managed to reduce losses last year by taking cost rationalization initiatives. DIL is taking various initiatives to improve company’s performance
including rightsizing stores, paying off debt from IPO proceedings, focusing on delivery which is a structural change in the industry, negotiating lease rental costs and
continued focus on store expansion.
ANALYST KRChoksey Research Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Vikrant Kashyap, research2@krchoksey.com, +91-22-6696 5423 is also available on Bloomberg KRCS www.krchoksey.com
Thomson Reuters, Factset and Capital IQPage 17
India Equity Institutional Research II SalesInitiating
Note Coverage II 14h September, 2021
Outlook and Valuation
Peer Comparison
DIL is one of the key player in the QSR industry and reasonably valued compared to its peers and industry average. The growth potential in the industry is immense
and DIL is adequately placed to take advantage of the prevailing trend in the industry. DIL’s margin profile is better than most of the key players and expected to
improve further. If we compare these companies on price to sales (on FY21 sales) Devyani International (price to sales 12.8x) is available at a discount to Jubilant
Foodworks (price to sales 14.2x).
In last one year the stock price of Jubilant Foodworks has given return of more than 80%, Westlife Development has given return of more than 40% and Burger King
India has given more than 160% return from its IPO price. In comparison, DIL has given 30% return since its listing.
Mkt Cap
EBIDTA
Company Name CMP (INR) (INR Mn) EV/EBIDTA EV/Sales Price/Sales RoE RoCE Company Name Revenue EBIDTA Margin PAT
Devyani International 115.1 1,38,410 54.8 12.5 12.8 -113% 9% Devyani International 11,348 2,269 20% -813
Jubilant FoodWorks
4,099 5,40,954 53.0 12.4 14.2 18% 16% Jubilant FoodWorks Limited 33,120 7,800 24% 2,320
Limited
Westlife Development Westlife Development Limited 9,860 610 6% -990
518 80,797 134.4 8.3 7.03 -17% -2
Limited
Burger King India Limited 160 61,375 86.7 4.4 10.1 -35 -7 Burger King India Limited 4,940 150 3% -1,740
Source: KRChoksey Research
Source: KRChoksey Research
Valuation
We believe multiple growth drivers are in place for QSR industry for next 5-10 years and DIL is in sweet spot to take advantage of them. Given the prevailing
opportunities in QSR industry and DIL’s focus on implementation of technology to increase footfall and improving operational efficiency, rightsizing stores, store
expansion in new areas, focus on improving unit metrics and reduction of debt, we expect DIL to be a key beneficiary of the prevailing trend in the industry. We
Initiate Coverage on Devyani International Ltd. with BUY rating and target price of INR 151 per share, 30x FY24E EV/EBIDTA and 31% upside from current levels. The
share price of DIL is trading at ~18% discount to its IPO listing price which provides good opportunity to buy the stock.
Recent initiatives taken by DIL will help in increasing revenue however the economic recovery post Covid-19 is key for the QSR industry. Reports suggest organised
restaurant business will take at least a year after the lockdown is lifted to recover from the Covid-19 pandemic as recovery would be gradual. We have considered
moderated impact of third wave of Covid-19 on the performance of the company in FY22. However, we will relook at our valuation considering sever impact of third
wave of Covid-19 on the economy and performance of the company.
ANALYST KRChoksey Research Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Vikrant Kashyap, research2@krchoksey.com, +91-22-6696 5423 is also available on Bloomberg KRCS www.krchoksey.com
Thomson Reuters, Factset and Capital IQPage 18
India Equity Institutional Research II SalesInitiating
Note Coverage II 14h September, 2021
Risks and Concerns:
• The outbreak of the COVID-19 pandemic and its continuing impact on the business and operations has been significant. The impact of the pandemic on company’s
operations in the future, including its effect on the ability or desire of customers to dine in stores, is uncertain and may be significant and continue to have an adverse
effect on company’s business prospects, strategies, business, operations, company’s future financial performance, and the price of their Equity Shares.
• The company relies on arrangements with Yum for its KFC and Pizza Hut stores that comprise a significant majority of company’s business, and a termination of or
inability to renew these arrangements, will have a material adverse effect on company’s business, results of operations and financial condition.
• The company has incurred losses in Fiscals 2019, 2020 and 2021, resulting in erosion of our net worth. In the event company’s net loss continues to increase, it may
adversely affect company’s business and financial condition.
• The company’s Statutory Auditors have included certain adverse remarks/ qualifications/ matters of emphasis in the Audited Consolidated Financial Statements.
• There are outstanding litigation proceedings against the Company, Subsidiaries, Directors, and Promoters. Any adverse outcome in such proceedings may have an
adverse impact on company’s reputation, business, financial condition, results of operations and cash flows.
• Changes in consumer preferences and food habits as well as negative perception of the QSR industry could decrease the demand for company’s products and
have a material adverse effect on company’s business, results of operations and financial condition.
• Increasing cost of raw materials and other costs could adversely affect company’s profitability.
• Failure to obtain or maintain or renew licenses, registrations, permits and approvals in a timely manner or at all may adversely affect company’s business and
results of operations.
• The company has certain contingent liabilities that have not been provided for in company’s financial statements, which if they materialize, may adversely affect
company’s financial condition.
• Any failure or disruption or breaches of company’s information technology systems or an inability to adapt to newer systems could adversely impact company’s
business and operations.
• If the company is unable to comply with health, safety and environmental regulations, and any other regulations, company’s business, results of operations and
reputation could be adversely affected.
ANALYST KRChoksey Research Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Vikrant Kashyap, research2@krchoksey.com, +91-22-6696 5423 is also available on Bloomberg KRCS www.krchoksey.com
Thomson Reuters, Factset and Capital IQPage 19
India Equity Institutional Research II SalesInitiating
Note Coverage II 14h September, 2021
Financials
Income Statement Balance Sheet
INR Mn FY20 FY21 FY22E FY23E FY24E INR Mn FY20 FY21 FY22E FY23E FY24E
Share capital 1,062 1,154 1,203 1,203 1,203
Revenues 15,164 11,348 15,459 21,919 28,265 Reserves and surplus -1,891 1,138 4,236 5,282 7,485
Shareholders' funds -2,282 719 5,019 6,065 8,268
COGS 4,604 3,447 4,684 6,641 8,564
Long-term borrowings 3402 3594 354 354 354
Gross profit 10,560 7,902 10,775 15,278 19,701 Short term borrowings 904.6 211.1 211.1 211.1 211.1
Total debt 4,307 3,805 565 565 565
Employee cost 2,255 1,543 2,102 2,981 3,844
Other Financial liabilities 11,812 7,986 7,986 7,986 7,986
Other expenses 5,750 4,089 5,643 7,672 9,893 Other Liabilities 126 179 179 179 179
SOURCES OF FUNDS 13,963 12,688 13,749 14,795 16,998
PPE 4,787 4,307 5,031 5,759 5,984
EBITDA 2,555 2,269 3,030 4,625 5,964 Other Intangible Assets 577 1,855 1,855 1,855 1,855
Capital WIP 135 143 143 143 143
EBITDA Margin 17% 20% 20% 21% 21% Non-current investments 11,498 7,922 7,922 7,922 7,922
Depreciation & amortization 2,233 2,295 2,164 2,630 2,827 Goodwill 224 644 644 644 644
Other financial assets 182 167 167 167 167
EBIT 283 -505 819 1,929 3,053 Non-current assets 17,404 15,039 15,763 16,491 16,716
Inventories 721 622 847 1,201 1,549
Interest expense 1,584 1,528 1,076 1,076 1,076
Trade receivables 173 169 212 300 387
Other income 187 641 155 219 283 Cash and Bank Balance 160 405 329 818 2,974
Other current & financial assets 378 449 450 451 452
PBT -769 -824 -102 1,072 2,260
Current assets 1,432 1,645 1,838 2,771 5,362
Tax 18 -11 -3 27 56 less: current liabilities and
4,873 3,996 4,033 4,726 5,406
provisions
Share of Profit/(Loss) of
0 0 0 0 0 Trade payables 1,632 1,619 1,655 2,347 3,027
Associates/Minority
Other current liabilities 170 193 193 193 193
Net profit -788 -813 -99 1,046 2,203 Other financial liabilities 3,027 2,100 2,100 2,100 2,100
EPS (INR) -1.14 -0.50 -0.08 0.87 1.83 Short-term provisions 44 83 84 85 86
Net current assets -3,441 -2,350 -2,195 -1,955 -44
No. of Shares (Mn) - Diluted 1,062 1,154 1,203 1,203 1,203 APPLICATION OF FUNDS 13,963 12,688 13,568 14,536 17,203
ANALYST KRChoksey Research Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Vikrant Kashyap, research2@krchoksey.com, +91-22-6696 5423 is also available on Bloomberg KRCS www.krchoksey.com
Thomson Reuters, Factset and Capital IQIndia Equity Institutional Research II SalesInitiating
Note Coverage II 14h September, 2021 Page 20
Cash Flow Statement
INR Mn FY20 FY21 FY22E FY23E FY24E
Net Cash Generated From Operations 3,015 2,391 1,754 3,849 5,249
Net Cash Flow from/(used in) Investing Activities -974 -3,586 -3,000 -3,000 -3,000
Net Cash Flow from Financing Activities -2,226 1,420 1,178 -387 -149
Net Inc/Dec in cash equivalents -133 267 -70 489 2,156
Opening Balance 266 132 400 329 818
Closing Balance Cash and Cash Equivalents 132 400 329 818 2,974
Ratio Analysis
Key Ratio FY20 FY21 FY22E FY23E FY24E
EBITDA Margin (%) 17% 20% 20% 21% 21%
RoE (%) - -113% -2% 17% 27%
RoCE (%) 14% -11% 15% 29% 35%
EV/EBITDA 51.6 62.7 47.8 31.2 23.9
EV/Sales 8.7 12.5 9.4 6.6 5.0
EPS (INR) -1.14 -0.50 -0.08 0.87 1.83
ANALYST KRChoksey Research Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Vikrant Kashyap, research2@krchoksey.com, +91-22-6696 5423 is also available on Bloomberg KRCS www.krchoksey.com
Thomson Reuters, Factset and Capital IQPage 21
India Equity Institutional Research II SalesInitiating
Note Coverage II 14h September, 2021
Rating Legend (Expected over a 12-month period)
Our Rating Upside
Buy More than 15%
Accumulate 5% – 15%
Hold 0 – 5%
Reduce -5% – 0
Sell Less than – 5%
ANALYST CERTIFICATION:
I, Vikrant Kashyap PGDBM (Finance & IT), Research Analyst, author and the name subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect my views about the subject issuer(s) or securities. I also certify that no part of our
compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.
Terms & Conditions and other disclosures:
KRChoksey Shares and Securities Pvt. Ltd. (hereinafter referred to as KRCSSPL) is a registered member of National Stock Exchange of India Limited and Bombay Stock Exchange Limited. KRCSSPL is a registered Research Entity vides SEBI Registration No. INH000001295 under SEBI
(Research Analyst) Regulations, 2014.
We submit that no material disciplinary action has been taken on KRCSSPL and its associates (Group Companies) by any Regulatory Authority impacting Equity Research Analysis activities.
KRCSSPL prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analyst covers.
The information and opinions in this report have been prepared by KRCSSPL and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to,
copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of KRCSSPL. While we would endeavor to update the information herein on a reasonable basis, KRCSSPL is not under any obligation to update the
information. Also, there may be regulatory, compliance or other reasons that may prevent KRCSSPL from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or
KRCSSPL policies, in circumstances where KRCSSPL might be acting in an advisory capacity to this company, or in certain other circumstances.
This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall not be
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recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and
opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent
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damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ
materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice. Our employees in sales and marketing team, dealers and other professionals may provide oral or written market commentary or trading
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Associates (Group Companies) of KRCSSPL might have received any commission/compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of brokerage services or specific transaction or
for products and services other than brokerage services.
KRCSSPL or its Associates (Group Companies) have not managed or co-managed public offering of securities for the subject company in the past twelve months.
KRCSSPL encourages the practice of giving independent opinion in research report preparation by the analyst and thus strives to minimize the conflict in preparation of research report. KRCSSPL or its analysts did not receive any compensation or other benefits from the companies
mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither KRCSSPL nor Research Analysts have any material conflict of interest at the time of publication of this report.
It is confirmed that, Vikrant Kashyap PGDBM (Finance & IT), Research Analyst and Parvati Rai (MBA-Finance, M.com), Head Research, of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months. Compensation of our
Research Analysts is not based on any specific brokerage service transactions.
KRCSSPL or its associates (Group Companies) collectively or its research analyst do not hold any financial interest/beneficial ownership of more than 1% (at the end of the month immediately preceding the date of publication of the research report) in the company covered by Analyst,
and has not been engaged in market making activity of the company covered by research analyst.
It is confirmed that, Vikrant Kashyap PGDBM (Finance & IT), Research Analyst and Parvati Rai (MBA-Finance, M.com), Head Research, do not serve as an officer, director or employee of the companies mentioned in the report.
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KRChoksey Shares and Securities Pvt. Ltd.
Registered Office:
1102, Stock Exchange Tower, Dalal Street, Fort, Mumbai – 400 001.
Phone: +91-22-6633 5000; Fax: +91-22-6633 8060.
Corporate Office:
ABHISHEK, 5th Floor, Link Road, Andheri (W), Mumbai – 400 053.
Phone: +91-22-6696 5555; Fax: +91-22-6691 9576.
ANALYST KRChoksey Research Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Vikrant Kashyap, research2@krchoksey.com, +91-22-6696 5423 is also available on Bloomberg KRCS www.krchoksey.com
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