Shares of jumped 8 per cent to hit an intraday high of ₹159.66 on Friday, while declined 4 per cent amid investor reaction to the announcement of their proposed merger through a share swap arrangement.
Devyani International was trading at ₹149.25, up ₹1.82 or 1.23 per cent from its previous close of ₹147.43 as of noon on Friday.
The stock saw heavy volumes with 330.24 lakh shares traded, valued at ₹508.24 crore.
In contrast, Sapphire Foods was trading at ₹251.70, down ₹11 or 4.19 per cent from its previous close of ₹262.70, with 53.92 lakh shares changing hands worth ₹137.74 crore.
nder which Sapphire Foods will merge into Devyani International through a share swap ratio of 177:100.
This means Sapphire Foods shareholders will receive 177 equity shares of Devyani for every 100 shares held in Sapphire Foods. The appointed date for the merger is April 1, 2026, with completion expected in 12-15 months subject to regulatory approvals.
JM Financial has valued the combined entity at ₹387 billion based on 28 times December 2027 estimated pre-Ind AS EV/EBITDA, implying a 45 per cent upside over the current combined market capitalization of ₹266 billion. JM Financial maintains a ‘Buy’ rating on Devyani with a price target of ₹180.
The merger will create one of India’s largest quick-service restaurant operators with approximately 2,875 stores by FY26 and operations across multiple brands including KFC, Pizza Hut, Costa Coffee, and owned brands like Biryani By Kilo.
The combined entity expects annual synergy benefits of ₹210-225 crore on a steady-state basis from the second full year of operations, driven by lower royalty costs, reduced corporate overheads, and procurement efficiencies.
Yum Brands has approved the consolidation, with Devyani agreeing to acquire 19 KFC restaurants in Hyderabad from Yum India for approximately ₹900 million and make a one-time payment of ₹3.2 billion towards merger approval. As a condition precedent, Sapphire Foods’ promoter will sell its 18.5 per cent stake to Arctic International, a Devyani group company.
SBI Securities described the development as positive for both companies in the long term, noting benefits from economies of scale and operational synergies.