Devyani International Ltd

Shares of Devyani International extended gains for a second straight session, rising as much as 7.8% intraday after a 6% jump a day earlier. The stock touched its highest level since January 19 and traded at 1.3x its 30-day average volume, indicating strong buying interest. This move came even as the broader market remained subdued, suggesting stock-specific triggers driven by earnings commentary and brokerage outlooks.

For Q3FY26, Devyani reported consolidated revenue of ₹1,441 crore, up 11.3% YoY, with India operations growing 12.1%. However, the company posted a net loss of ₹10.3 crore compared to a marginal loss of ₹0.5 crore last year. Same-store sales growth (SSG) remained weak across most formats during the quarter, reflecting continued pressure from muted consumer demand.

Brokerages pointed to encouraging trends emerging in January 2026, where most formats - except Pizza Hut - have started reporting positive SSG. Store expansion also accelerated, with 54 new KFC outlets added in the quarter against a full-year target of 110–120 stores. Analysts believe this momentum reinforces long-term growth visibility in the quick-service restaurant (QSR) category.

The board approved acquiring an additional 11.4% stake in Sky Gate Hospitality for ₹57.5 crore, strengthening its portfolio presence. More importantly, analysts are optimistic about the proposed merger between Devyani International and Sapphire Foods, which is expected to unlock scale advantages, improve unit economics, and enhance operating leverage across brands and geographies.

Emkay noted muted Q3 trends but highlighted recovery signs. Motilal Oswal retained its EBITDA estimates for FY27 and FY28, citing a positive start to CY26. Antique Stock Broking, while constructive on long-term CAGR expectations, cautioned that weak consumer sentiment could continue to weigh on margins in the near term.

Despite reporting a higher loss, the market reaction suggests investors are looking beyond the quarter. Recovery in same-store sales, aggressive store additions, strategic stake acquisition, and merger-led scale benefits are shaping expectations for improved performance ahead—explaining the sharp move in the stock.