Devyani Intl. (DEVYANI)

FairStock Score: 42/100 — MIXED

Score breakdown: P/E: 0/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• 5-year revenue CAGR of 34.26% shows strong, compounding scale growth.
• Piotroski F-Score of 8/9 indicates improving underlying fundamentals.
• Positive free cash flow of ₹439 Cr provides some cushion despite accounting loss.
• Altman Z-Score of 3.48 suggests the balance sheet is not in imminent distress.
• Promoter holding of 61.37% aligns insiders with minority shareholders.

Concerns

• ROE is negative (-3.96%) and latest quarter is a ₹11 Cr net loss; no reliable earnings power.
• Valuation is extreme: P/B 12.40, EV/EBITDA 219.99, and no dividend yield.
• High leverage with Debt/Equity 2.15 adds risk to a fixed-cost restaurant model.
• Stated profit growth of 1000% is from a low/near-zero base and not a useful earnings trend.

AI Analysis

When I examine Devyani International, I see a restaurant business that has clearly been running hard: five-year revenue CAGR is an impressive 34.26%, and latest quarter sales are ₹1,441 Cr. But my first question as a value investor is not 'How fast is it growing?' It is 'How much does it earn for me?' Today, the answer is not good. Return on equity is negative at -3.96%, and the latest quarter shows a net loss of ₹11 Cr. There is no P/E to speak of, so I cannot anchor my decision to earnings. The market instead asks me to pay ₹110, or 12.40 times book value, for a company with negative ROE. EV/EBITDA of 219.99 tells me Mr. Market is paying for a future that hasn't arrived. Debt-equity ratio of 2.15 is uncomfortable for a business with rent, labour, and royalty costs; Graham would insist on a stronger balance sheet. To be fair, free cash flow is positive at ₹439 Cr, the Piotroski score is a strong 8/9, and the Altman Z-score of 3.48 suggests no near-term distress. Promoter holding at 61.37% is reassuring. Profit growth of 1000% sounds exciting, but a 1000% move from a tiny or negative base is not evidence of durable earnings power. The DCF value of ₹190.66 is above the current price, but with 220 times EBITDA, the margin of safety is imaginary. I would wait for the latest quarter loss to turn into consistent profit, margins to build, ROE to become meaningfully positive, and debt to fall. Until then, this is a fast-growing story at an unjustifiable price.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer