Portfolio Stock Update : This QSR is our bet on AIR TRAFFIC and NON METRO CITIES
Portfolio Stock Update : This QSR is our bet on AIR TRAFFIC and NON METRO CITIES
We have this stock in our CORE Portfolio and our conviction on this story is stronger than ever backed by proven management and great results !
Devyani International Ltd
The company has been on our radar since it listed itself on the bourses and our rationale has been backed by the management's performance in VBL and India's QSR growth prospects !
They operate the Pizza Hut, KFC and Costa Coffee along with Vaango and Foodstreet
Think about the last (Indian) airport you visited and did not see any of these outlets buzzing with people
First 1000 stores
The company reached its 1k store milestone in the June Quarter in 25 years of operations and they plan to double that in the following 4-5 years. Operating in 215 cities in India, they now realize 52% of revenues from "non- metro cities".
This company allows us to bet on India's growing domestic air traffic and the QSR sales from non- metro cities
The core brands have reached Average Daily Sales (ADS) above their pre- pandemic levels and the company has sustained/ expanded margins even with the inflationary head winds.
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The above screenshot from the DIL investor presentation show how they have performed in the past quarter
But is it still worth buying..
According to an Economic Times article, the FTSE global all cap index would include Devyani in their next rejig- which would mean all the tracking funds would have to buy the stock
The company has been operating with a lean business model and at a high growth rate of 42.8 %, trading at 86.3 x PE which puts the company at a PEG of 2.016x - which might sound expensive however with the management's forecast and their ability to execute- the company would seem aptly priced.
However, its trading at par with its major peer (jubilant foods) though Jubilant has a much lower growth rate. We would not be surprised to see funds swap Jubilant for Devyani as revenue improve !!!