Devyani announces Thai expansion plans

Devyani International , a leading Indian QSR player, is set to acquire Restaurants Development, a Thailand-based QSR operator, and foray into the Thailand market. The acquisition, valued at Rs 1,066 crore, will be carried out by one of Devyani's subsidiaries, which will hold a majority stake through a series of transactions.

Of the total amount, Devyani International will contribute Rs 341 crore. Additionally, Temasek, the shareholder in the subsidiary, will contribute Rs 328 crore, and a local Thai partner will invest Rs 12 crore. The balance will be financed through local bank debt.

What does Restaurant Development do?

Restaurant Development is a leading QSR player in Thailand, operating 274 KFC stores. Since FY20, it has added 147 new stores in Thailand, and in CY22, it clocked an annual revenue of Rs 1,165.

The rationale behind the move

KFC is the highest-selling QSR chain in Thailand. In fact, KFC rules the Thai QSR landscape, with four times the store count than its nearest competitor. Also, poultry accounts for a majority of the meat consumption in Thailand.

Devyani aims to capitalise on the above two trends through the acquisition. The acquisition also stands to aid the company in its goal of doubling its store count in the next 10 years.

Besides, Restaurant Development, the acquired company, is also present in the limited-service restaurant (LSR) space, a hit in Thailand. These restaurants offer lightning-quick services and keep customer-staff interaction at a minimum.

Investors' corner

The acquisition does add new growth engines to Devyani's arsenal. However, investors should note that Devyani does not have adequate liquid cash in its books to fund this acquisition and has taken the debt route to raise capital.

Also, the QSR space remains highly competitive. Investors in the segment must also be aware of how one must analyse QSR companies. You may consult our article on the same .

The above is not a stock recommendation. Please do the due diligence before investing.

Also read: What to look for in a company before investing?