Motilal Oswal Recommends To Buy This Food Service Stock For 18% Upside

The Indian Food Service Industry (FSI) is expected to grow by ~9% CAGR over FY20-25E. Renowned brokerage firm Motilal Oswal has recommended investors to buy stocks of Devyani International with a potential upside of 26%, within a target period of 1 year.

Target Price

The Current Market Price (CMP) of Devyani International is Rs. 161. The brokerage firm, Motilal Oswal Recommends has estimated a Target Price for the stock at Rs. 190. Hence the stock is expected to give an 18% return, in a Target Period of 12 months.

Stock Outlook
Current Market Price (CMP)	Rs. 161
Target Price	Rs. 190
1 Year returns	18.00%

Company performance

Devyani International's sales stood at Rs. 11.3 b, in FY 21, and the brokerage firm is expecting it is to grow Rs. 20.1 b in FY 22. In FY 21 EBITDA stood at Rs. 2.3 b which is expected to go at Rs. 4.6 b in FY22. DEVYANI is focusing on the small store to rapidly add new stores. Its store network is expected to increase from 264 in FY21 to 574 in FY24, marking a ~30% CAGR.

Comments by Motilal Oswal

Maintaining a buy rating, Motilal Oswal said, "We are bullish about DEVYANI's long-term business prospects and initiate coverage with a Buy rating." The brokerage firm expects the company's sales to grow at a CAGR of 28% to Rs. 40.8 b and EBITDA margin to expand to 23.8% over FY20-24, and said, DEVYANI's KFC business with strong brand equity that has led to robust Average Daily Sales (ADS) and profitability.

About the company

Devyani International (DEVYANI) is the largest franchisee of Yum, in India. The company operates brands such as KFC, Pizza Hut and Taco Bell and has a global presence with more than 52,000 restaurants in over 150 countries. DEVYANI develops and operates KFC and Pizza Hut stores in India and in territories for which it holds the rights.

Disclaimer

The above stock was picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.