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Devyani International's shares rose after it announced a USD 934 million merger with Sapphire Foods, creating a large fast-food platform operating over 3,000 KFC and Pizza Hut outlets in India and overseas. The deal brings Devyani closer in scale to market leader Jubilant Foodworks. Analysts view the merger as a strategic move that could simplify operations and unlock cost savings at a time when fast-food operators face slowing sales and margin pressure. Both companies had reported losses in the September 2025 quarter.
Shares of Devyani International, the Indian franchise operator of KFC and Pizza Hut, moved higher after the company announced a long-awaited merger with Sapphire Foods in a transaction valued at USD 934 million. The deal is set to create one of India's largest fast-food platforms, positioning the combined business closer to market leader Jubilant Foodworks, which operates the Domino's Pizza chain in the country. Advertisement
Following the announcement, Devyani's stock rose as much as 8.3% during early trade before easing. It was last trading around 2.8% higher at INR 151.39. In contrast, Sapphire Foods shares slipped nearly 3% to about INR 254.25, while Jubilant Foodworks was marginally lower at around INR 552.20.
Once merged, the combined entity will operate more than 3,000 KFC and Pizza Hut outlets across India and select overseas markets. This compares with Jubilant Foodworks approximately 3,480 outlets in India, highlighting the scale the Devyani Sapphire platform is expected to achieve. Both companies operate franchises of Yum Brands.
Analysts described the merger as a positive strategic step for Devyani. JP Morgan noted that the transaction simplifies the group structure, allows for faster decision-making, and opens up scope for meaningful cost efficiencies. These factors are expected to strengthen Devyani's ability to compete not only with established peers but also with food delivery platforms that have increased pressure on traditional dine-in and quick-service restaurant models.
The merger comes at a time when India's fast-food franchise operators are facing several headwinds. Rising input and operating costs, slower same-store sales growth, and margin pressure have weighed on performance, as consumers have been cutting back on discretionary spending. Both Devyani and Sapphire reported losses in the quarter ended September 2025, underlining the challenges in the sector.
According to Emkay Global, the combined business has the potential to generate revenue and operating profit levels that are 50% to 60% higher than the companies current standalone performance. The brokerage added that the merged entity's scale and growth trajectory could move closer to that of Jubilant Foodworks, although profitability margins are expected to remain relatively weaker in the near term.
Under the agreed terms, Devyani will issue 177 of its shares for every 100 shares held in Sapphire Foods. Jefferies analysts pointed out that the merger ratio is largely in line with the companies closing share prices from the previous trading session, limiting the scope for any major price-related adjustments following the announcement.
Source PTI
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