Devyani Shares Rally Post Sapphire Foods Merger Deal: Will KFC–Pizza Hut Scale Drive Gains? Check Target Price

Devyani Share Price Today: Shares of Devyani International Limited rallied on Friday, January 2, after the company announced the merger of Sapphire Foods India Limited. The Gurugram-headquartered food chain operator is likely to benefit from Sapphire Foods' strong presence in tier 1 and tier 2 cities, leveraging its KFC and Pizza Hut food chains.

Devyani International shares were trading 1.72% higher at Rs 150.50 per share on the BSE, with a market capitalisation of Rs 18,554.73 crore. The shares had touched an intraday high mark of Rs 159.45 per share and an intraday low mark of Rs 149.85 per share.

Devyani International Share Price Recommendation

The Devyani International and Sapphire merger is likely to help the former firm in the consolidation and execution of Yum brands (KFC and Pizza Hut) under a single operator. It will also eliminate the overlaps and accelerate decision-making, noted Antique Stock Broking in its report. The brokerage has retained a 'Hold' rating for the stock with a target price of Rs 149 per share.

"While we remain cautious on the broader QSR space, we expect gradual operational improvements as integration progresses. Furthermore, rationalisation of corporate overheads could support near-term margin expansion. Based on our existing projections for Devyani and Sapphire, we estimate a target price of INR 151 for the merged entity, derived from an SOTP valuation on 1HFY28 estimates," noted the brokerage in its report.

Devyani International Sapphire Merger

The merger of Devyani International and Sapphire Foods India Limited may take nearly 12-13 months to complete. The duration of merger completion is subject to the mandatory approvals from the regulatory authorities.

"Upon completion, the transaction will result in DIL becoming one of the largest quick-service restaurant (QSR) operators in India by combining the operations of both companies, positioning the merged entity for the next phase of accelerated growth, scale, and profitability," noted the company in its press release on Thursday, 1 January.

Merger will be executed at a swap ratio of 177 equity shares of DIL to be issued for every 100 equity shares of SFIL. The Arctic International, a group company, will acquire around 18.5% of SFIL's paid up equity share capital from the existing SFIL promoters, with an option to assign to a mutually agreed financial investor.

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