Devyani International share price jumps 8%, Sapphire Foods trades in the red as companies to merge; details to know, analysts' views

Devyani International shares jumped as much as 8.29% to ₹159.66 apiece on the NSE, while Sapphire Foods India was trading around 3% lower at ₹255.15.

Sapphire Foods, the franchise operator of Yum! Brands' restaurants, KFC and Pizza Hut, will merge with Devyani International Ltd, one of India's largest and fastest-growing chains of quick-service restaurant (QSR) operators, which also operates similar brands through a share-swap ratio.

The boards of Devyani International Ltd (DIL) and Sapphire Foods India Ltd (SFIL) approved a scheme of arrangement for the merger of SFIL with and into DIL at their respective meetings held on Thursday, marking a strategic consolidation of the two companies.

The strategic consolidation of the two QSR operators will also create "a single unified Yum! India franchisee for KFC and Pizza Hut," said a late-night joint statement.

What leading analysts say

Most analysts believe that the merger will be beneficial for Devyani International.

In a note, UBS said that the Devyani–Sapphire merger should deliver scale benefits and help streamline execution. Under the proposed terms, Devyani will issue 177 shares for every 100 Sapphire shares. UBS estimates annual synergies of ₹210–225 crore, expected to accrue from the second year of operations, and believes that Devyani will emerge as the primary beneficiary of the merger.

JP Morgan described the merger as a welcome strategic move, although it expects synergistic benefits to accrue with a lag. The investment firm highlighted that economies of scale, a simplified organisational structure, potential for meaningful cost savings, and faster decision-making should enable Devyani to compete more effectively over time.

Merger: Finer details

The proposed merger is subject to receipt of all customary regulatory and statutory approvals, including nods from the stock exchanges, the Competition Commission of India, the National Company Law Tribunal(s), and the approval of the shareholders and creditors of both companies.

"The process of obtaining these approvals is expected to take approximately 12 to 15 months, following which the merger will become effective," it said. "Upon completion, the transaction will result in DIL becoming one of the largest quick-service restaurant operators in India by combining the operations of both companies, positioning the merged entity for the next phase of accelerated growth, scale, and profitability."

Scheme of arrangement: What shareholders should know

According to the scheme of arrangements, "177 equity shares of DIL will be issued for every 100 equity shares of SFIL".

Moreover, Arctic International, a DIL group company, will acquire approximately 18.5% of SFIL’s paid-up equity share capital from the existing SFIL promoters, with an option to assign to a mutually agreed financial investor.

The US-based Yum! Brands has granted its approval for the consolidation of DIL and SFIL.

Other key details

DIL will acquire 19 KFC restaurants, which are currently operated by its local unit, Yum! India, in Hyderabad, which opened when the company was entering and expanding its base in India. Besides, "DIL will pay a one-time charge to Yum! India towards merger approval and the licence fee for the additional territory."

Yum! Brands operates in India with three QSR brands -- KFC, Pizza Hut, and Taco Bell. Besides, it also owns Habit Burger Grill, among others.

Rationale behind merger

The proposed merger is expected to have synergy benefits, such as the formation of one of the largest QSR platforms in India, with enhanced scale and national footprint, excluding captive markets. It is also expected to unlock growth with a unified brand strategy for both KFC and Pizza Hut.

"DIL is expecting an overall synergy of Rs 210 to 225 crore on an annual basis from the 2nd full year of operations of the integrated company," it said.

Last year, DIL acquired Sky Gate Hospitality, which owns brands such as Biryani By Kilo and Goila Butter Chicken.

What companies say?

Commenting on the development, DIL's Non-Executive Chairman Ravi Jaipuria said, "The merger also adds a strong international presence in Sri Lanka, which complements our existing overseas operations."

"This combination will allow DIL to realise meaningful economies of scale, leverage a unified technology platform, and strengthen our supply-chain capabilities. Together, these advantages will help unlock sustained value creation and long-term growth for our shareholders, customers, employees, and partners," he said.

DIL is the largest franchisee for Yum Brands' QSR chains – KFC and Pizza Hut – in India. In addition, DIL is the sole franchisee for Costa Coffee, Tea Live, New York Fries and Sanook Kitchen in India. It also owns the South Indian vegetarian food QSR chain Vaango.

It operates stores across more than 280 cities in India, Nigeria, Nepal and Thailand, as of September 30, 2025.

Sumeet Narang, SFML nominee director of SFIL and founder of Samara Capital, said, "We are extremely excited about this development, which brings together a single, unified franchisee for KFC and Pizza Hut in India through the merger with Devyani International Limited. This transaction reflects the shared long-term vision and strong partnership between Samara Capital Group and RJ Corp."

Yum! Brands CFO Ranjith Roy said, "DIL and SFIL have been outstanding partners to Yum! for many years. We are pleased to support this proposed merger to unlock a new phase of accelerated growth in the region and to advance supply chain operations, leading to a stronger, more resilient partner in India."

SFIL has franchise rights to operate KFC outlets in 10 states and Pizza Hut outlets in 11 states. Besides, SFIL also operates in Sri Lanka through its subsidiaries KFC, Pizza Hut, and Taco Bell restaurants. It operates over 1,000 restaurants in India and Sri Lanka.