KFC India operator Devyani tops Q1 profit view as discounts drive demand

Devyani International

05/08/2024 08:09

BENGALURU, Aug 5 (Reuters) - KFC India operator Devyani
International  DEVY.NS  reported a better-than-expected
first-quarter profit on Monday, as promotions and discounts drew
customers in.
    Consolidated net profit rose to 301.1 million rupees ($3.6
million) for the quarter ended June 30 from 117.6 million rupees
a year ago.
    Analysts, on average, expected a profit of 207.5 million
rupees, as per LSEG data.
    To attract budget-conscious customers, Devyani offered
discounts and promotional offers such as chicken rolls at 99
rupees ($1.2) at its KFC outlets. The T20 Cricket World Cup and
the coinciding school holidays also helped drive its sales. 
    India's quick-service restaurant (QSR) chains have struggled
with sluggish demand and rising costs amid inflationary
pressures. The country's retail inflation hovered around 5%
throughout the quarter due to elevated food prices. 
        Rival Sapphire Foods India  SAPI.NS  and Westlife
Foodworld  WEST.NS  reported a bigger-than-expected decline in
profit, amid frail demand, while Burger King's India operator
Restaurant Brands Asia  RESR.NS  reported a narrower
first-quarter loss as offers and discounts swayed customers.
        Devyani, which also operates the Costa Coffee chain,
said its revenue from operations rose 44% to 12.22 billion
rupees in the quarter.
    However, its earnings before interest, tax, depreciation and
amortization margin contracted to 18.3% from 20.5% an year ago,
with expenses surging 43%. 
    Same store sales at its KFC India operations also saw a
de-growth of 7% compared to 0.9% an year ago.
    Devyani's shares fell as much as 3.5% after the results.
    Indian shares were trading lower on Monday, with the
benchmark Nifty 50 index  .NSEI  down 2.3% amid a broader market
sell-off.
    
    


($1 = 83.8450 Indian rupees)

 (Reporting by Ashna Teresa Britto in Bengaluru; Editing by
Eileen Soreng)
 ((AshnaTeresa.Britto@thomsonreuters.com;))