Investing idea of the month : Devyani International Ltd

 

In this segment I will provide one investment idea for your portfolio per month, this article is not a buy recommendation, you can do your due diligence before purchasing the stock.

Basic rational for the suggestion: People are dinning out and visiting malls as per pre-covid levels and the restaurant business is picking up sales. Other rational is people are moving back to metro city to work from office fulltime or in hybrid models and there is high demand for QSR.

Devyani International is well know brand which was one of the IPO that happened in past year and the price is still surging. It is the largest franchisee of Yum Brands in India and is among the largest operators of quick service restaurants chain in India and operates 655 stores across 155 cities in India. Well know QSR like Pizzahut, KFC, Costa Coffee are run by them.

The share price increased by 64% in a year and the stock is at all time high right now.

As far as fundamentals goes:

They have release a good Q1 results, the company’s revenue from operations grew 100 per cent year-on-year (YoY) to Rs 705 crore from Rs 353 crore in the year ago quarter. Reported earnings before interest, taxes, depreciation, and amortization (ebitda) rose 167 per cent YoY to Rs 164 crore, translating to an ebitda margin of 23.3 per cent during the quarter. 

The PE ratio is on the higher side that is 156.71, but for high growth stock this will be usually on higher side. 

Moreover, there is bigger promise on sales growth as they are looking to add 200-250 stores annually across India. This is boost in capturing more market share from their competitors.

Current CMP: 212 (17^th Aug 2022)

 

I wouldn’t go all in now and buy the stock systematically in your portfolio as the stock is at its all-time high. You can buy it at 200 price or at 140-150 price range will be a great point to accumulate the stock as well as they tend to be psychological figure and have good support as well.