Devyani International: KFC operator enters Thailand; analysts share fresh stock price targets

Shares of Devyani International Ltd will be in focus on Tuesday morning after the KFC operator entered into Thailand QSR (quick service restaurant) market through a strategic partnership to acquire 274 KFC restaurants in Thailand. A subsidiary Devyani International DMCC signed a share purchase agreement with Restaurants Development Co (RD) and would be paying $129 million for 93 per cent stake in the company. The deal is seen fairly valued.

“The subsidiary will be meeting the acquisition’s funds (Rs 670 crore) with capital infusions from the India parent (Rs 340 crore) and Temasek (Rs 330 crore). Valuations are fair at 9-10 times its trailing Ebitda, given the potential of low-to-mid teens Ebitda CAGR for Thailand business. Devyani expects doubling of store count in 10 years, and we see scope of low-to-mid-single-digit SSG profile and potential margin gains of 200-300 bps over…