Please refer to important disclosures at the end of this report

1

Devyani International Ltd (DIL) is the largest franchisee of Yum Brands in India

and is among

the largest chain operators of quick service restaurants (“QSR”) in

India on a non-

exclusive basis, and operates 696 stores across 166 cities in

India, as of June 30, 2021.

Yum! Brands Inc. operates brands such as KFC, Pizza

Hut and Taco Bell and has a

presence globally with more than 50,000

restaurants in over 150 countries, as of December 31, 2020. In addition,

Devyani International is a franchisee for the Costa Co

ffee brand and stores in

India. DIL operated 284 KFC stores and 317 Pizza Hut stores and

44 Costa

Coffee stores in India as of June 30, 2021. In their Core Brands Business, they

had an extensive presence in 26 states and 3 union territories in India as of June

30, 2021

Positives: (a) Portfolio of well recognized global brands across spectrum (

b)

Presence across key consumption markets with a cluster-based approach

(c)

Experienced Board and senior management team.

Investment concerns: (a) DIL is making continuous losses on bottom-

line front,

hence profit concerns remain; (b) Slowdown in the eco

nomy could impact the

overall revenue of the company (discretionary in nature).

Outlook & Valuation: In terms of valuations, the post-

issue FY2021 EV/Sales

works out -

9.9x to (at the upper end of the issue price band), which is low

compared to peers (Jubilant Foodworks-15.4x, Burger King India -

14.8x,

Westlife Development –

10x). Further, Devyani International has a better

operating margin compared to Westlife Development & Burger king. We believe

this valuation is at reasonable levels.Thus, we

recommend a subscribe rating on

the issue.

Key Financials

Y/E March (Rs cr) FY2019 FY2020

FY2021

Net Sales

1,311

1,516

1,135

% chg -

15.7

(25.2)

Net Profit (94) (121)

(63)

OPM (%)

21.3

16.8

20.0

EPS (Rs) (0.8) (1.0)

(0.5)

P/E (x) - -

-

P/BV (x) - -

95.1

EV/Sales (x)

8.6

7.5

9.9

EV/EBITDA (x)

40.4

44.4

49.6

Angel Research; Note: Valuation ratios based on pre-issue outstanding shares and at upper end

of the price band

Subscribe

Issue Open: Aug 04, 2021

Issue Close: Aug 06, 2021

Offer for Sale: 15.5cr

share

QIBs 75%

Non-Institutional 15%

Retail 10%

Promoters 68.0%

Others 32.0%

Post Issue Shareholding Pattern

Post Eq. Paid up Capital:

`120

cr

Issue size (amount):

`1,838cr

Price Band:

`86

-90

Lot Size: 165shares

Post-issue mkt.cap:

`10,361

*– 10,823cr**

Promoters holding Pre-Issue: 75.8%

Promoters holding Post-Issue: 68.0%

*Calculated on lower price band

** Calculated on upper price band

Book Building

Fresh issue:

`440

cr

Issue Details

Face Value:

`

1

Present Eq. Paid up Capital:

`115

cr

Amarjeet S Maurya

+022 39357600, Extn: 6831

amarjeet.maurya@angelbroking.com

Devyani International Ltd

IPO Note |

Food & Beverage

August, 03

, 2021

Devyani International Ltd |

IPO Note

August 03, 2021

2

Company background

Devyani International Ltd (DIL) is the largest franchisee of Yum Brands in India and

is among the largest chain operators of quick service restaurants (“QSR”) in India

on a non-exclusive basis, and operates 696 stores across 166 cities in India, as of

June 30, 2021.

Yum! Brands Inc. operates brands such as KFC, Pizza Hut and Taco Bell and has a

presence globally with more than 50,000 restaurants in over 150 countries, as of

December 31, 2020. In addition, Devyani International is a franchisee for the Costa

Coffee brand and stores in India.

DIL operated 284 KFC stores and 317 Pizza Hut stores and 44 Costa Coffee stores

in India as of June 30, 2021. In their Core Brands Business, they had an extensive

presence in 26 states and 3 union territories in India as of June 30, 2021.

Issue details

DIL is raising `1,838cr through fresh issue (`440cr) and Promoter & investors are

selling equity share 15.5cr through offer for sale in the price band of `86-90.

Exhibit 1: Pre and post IPO shareholding pattern

No of shares (Pre-issue)

% No of shares (Post-issue) %

Promoters

874,339,464 75.8%

817,595,985 68.0%

Others 279,295,526 24.2%

384,927,893 32.0%

Total 1,153,634,990 100.0%

1,202,523,878 100.0%

Source: Source: RHP, Note: Calculated on upper price band

Objectives of the Offer

 To repayment and/or pre-payment (` 320cr)

 To meet general corporate purposes.

Devyani International Ltd |

IPO Note

August 03, 2021

3

Exhibit 2: Consolidated Income Statement

Y/E March (` cr) FY2019

FY2020 FY2021

Net Sales

1,311

1,516

1,135

% chg

15.7

(25.2)

Total Expenditure

1,032

1,261

908

Raw Material

389

460

345

Personnel

192

225

154

Others Expenses

451

575

409

EBITDA

279

255

227

% chg

(8.4)

(11.2)

(% of Net Sales)

21.3

16.8

20.0

Depreciation& Amortisation

203

223

229

Impairment of non financial asset

25

4

48

EBIT

51

28

(51)

% chg

(44.9)

-

(% of Net Sales)

3.9

1.9

(4.5)

Interest & other Charges

136

158

153

Other Income

13

19

64

(% of PBT) (22.6)

(24.3)

(77.7)

Exceptional Item

13

35

57

Recurring PBT (58)

(77)

(82)

% chg

32.6

7.1

Tax

1

2

(1)

(% of PBT) (2.2)

(2.4)

1.3

PAT After Tax (59)

(79)

(81)

Minority Interest (after tax) (35)

(43)

18

Reported Loss (94)

(121)

(63)

Basic EPS (`) (0.8)

(1.0) (0.5)

% chg

29.0

(48.1)

Source: Company, Angel Research

Devyani International Ltd |

IPO Note

August 03, 2021

4

Consolidated Balance Sheet

Y/E March (` cr) FY2019 FY2020 FY2021

SOURCES OF FUNDS

Equity Share Capital

106

115

Reserves& Surplus

(176)

(295)

(2)

Shareholders Funds

(70)

(189)

114

Total Loans

488

544

463

Deferred Tax Liability

-

Total Liabilities

367

316

535

APPLICATION OF FUNDS

Gross Block

1,987

2,083

1,797

Less: Acc. Depreciation

408

447

405

Net Block

1,578

1,635

1,392

Capital Work-in-Progress

12

14

Investments

-

Current Assets

210

227

252

Inventories

55

72

62

Sundry Debtors

23

17

Cash

27

16

41

Loans & Advances

34

38

45

Other Assets

71

84

88

Current liabilities

1,440

1,568

1,133

Net Current Assets

(1,231)

(1,341)

(881)

Deferred Tax Asset 8 8

10

Mis. Exp. not written off

-

Total Assets

367

316

535

Source: Company, Angel Research

Devyani International Ltd |

IPO Note

August 03, 2021

5

Consolidated Cash Flow Statement

Y/E March (` cr) FY2019 FY2020 FY2021

Profit before tax

(93)

(120)

(64)

Depreciation

226

247

236

Change in Working Capital

2

22

40

Interest / Dividend (Net)

135

159

152

Direct taxes paid

(0) (1)

0

Others

9

(7)

(124)

Cash Flow from Operations

278

301

240

(Inc.)/ Dec. in Fixed Assets

(141)

(99)

(133)

(Inc.)/ Dec. in Investments

(24)

7

(222)

Cash Flow from Investing

(165)

(91)

(355)

Issue of Equity

0

348

Inc./(Dec.) in loans

(97)

(179)

(156)

Dividend Paid (Incl. Tax)

0

Interest / Dividend (Net)

(34)

(44)

(49)

Cash Flow from Financing

(131)

(223)

142

Inc./(Dec.) in Cash

(18)

(13)

27

Opening Cash balances

44

27

13

Closing Cash balances

27

13

40

Source: Company, Angel Research

Devyani International Ltd |

IPO Note

August 03, 2021

6

Key Ratios

Y/E March

FY2019

FY2020 FY2021

Valuation Ratio (`)

P/E (on FDEPS)

-

P/CEPS

75.4

74.9

73.1

P/BV

-

95.1

EV/Sales

8.6

7.5

9.9

EV/EBITDA

40.4

44.4

49.6

EV / Total Assets

30.7

35.9

21.0

Per Share Data (`)

EPS (Basic)

(0.8)

(1.0) (0.5)

EPS (fully diluted)

(0.8)

(1.0) (0.5)

Cash EPS

1.2

Book Value

(0.6)

(1.6)

0.9

Returns (%)

ROCE

-

Angel ROIC (Pre-tax)

-

ROE

-

Turnover ratios (x)

Asset Turnover (Gross Block)

0.7

0.6

Inventory / Sales (days)

15

17

20

Receivables (days)

6

4

5

Payables (days)

42

51

63

Working capital cycle (ex-cash) (days)

(20)

(29)

(38)

Source: Company, Angel Research

Devyani International Ltd |

IPO Note

August 03, 2021

7

Research Team Tel: 022

-

39357800 E

-

mail: research@angelbroking.

com Website:

www.angelbroking.com

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