On Tuesday, Macquarie initiated coverage on Devyani International (NS:DEVY) Ltd (DEVYANI:IN) shares, the largest Yum India franchisee, with an Outperform rating and a price target of INR230.00. The new coverage highlights the firm's positive outlook on the company's growth prospects, particularly in the KFC brand, citing its favourable geographies and competitive position in the chicken segment.
The research firm acknowledges that while Pizza Hut may face challenges in achieving a rapid turnaround, there are potential upsides in Devyani's other brands, such as Costa Coffee and Vaango!. These brands could contribute to the company's overall growth trajectory.
In their analysis, Macquarie points out the near-average enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) valuation of Devyani International. This metric is used to assess a company's value, including its debt, relative to its cash earnings minus non-cash expenses. It's a common valuation tool used to compare companies within the same industry.
The firm's report is optimistic about the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) growth, projecting a high-teen compound annual growth rate (CAGR) in Thailand over the medium term. This expectation is based on the company's current market positioning and growth strategies in the region.
Macquarie's initiation of Devyani International with an Outperform rating reflects their confidence in the company's ability to perform well in the market, driven by its strong brand portfolio and strategic market positions. The price target of INR230.00 suggests a positive outlook for the stock's future performance.
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