Brokerage firm JM Financial initiated attention on Devyani International Ltd, KFC, and Pizza Hut franchises in India, with a “buy” rating and target price of Rs 195 per share, 22% higher than the current market price.

The company’s healthy brand portfolio, broad market potential, capable execution abilities, and sturdy support from promoter RJ Corp with other brands like Costa Coffee display confidence in its growth prospects, the broking firm’s report showed on April 19.

The Analysts at JM Financials wrote that correction grants an attractive entry point for potential investors as the intrinsic strengths of the business and market opportunity are uncompromised.

Devyani is the top franchisee of Yum Brands in India, having a significant share of 64/59% of the store network and 57/55% of the Pizza Hut (PH) and KFC sales of FY23’s nine months.

With a diverse brand portfolio covering pizza, chicken, and cafe, Devyani is well-positioned to supply a wide range of consumers through strong brands like PH, KFC, and Costa Coffee.

KFC is a vital source of earnings for Devyani, leveraging its revolutionary market status, while Pizza Hut shows steady upgrading in the operational metrics.

The other recovery areas of Devyani’s, include Costa Coffee and international operations. At the same time, the owned brands contributed to a remarkable shift in profitability and a significant rise in return on invested capital (RoIC), leading the quick-service restaurant (QSR) industry.

The company acknowledged a huge market opportunity and leveraged its apt store format and strong unit economics to embark store expansion plan, adding 246/228 stores in FY22/9MFY23 and aiming for 250-300 store additions annually, JM Financial said.

Devyani focused on augmenting profitability through strategic initiatives such as restructuring store scopes, keeping a stable mix of stores between metro and non-metro markets (signifying 52% of the store network), optimising staff costs, and improving capital efficiency.

At 11:13 am, the stock traded almost 1% at Rs159.45 on the NSE from the previous close.