BUZZ-Street View: Prolonged recovery ahead for Indian Pizza Hut operator

Devyani International DEVY.NS, which operates KFC and Pizza Hut restaurants in India, falls 2.19% to 166 rupees

Co's Q3 profit before tax drops 12% y/y amid dip in same-store sales for Pizza Hut and KFC in a weak demand environment

WEAKEST SAME-STORE SALES AMONG PEERS; PIZZA HUT EXPANSION TO MODERATE

Ambit Capital ("sell"; PT: 142 rupees): DEVY reports weakest same-store sales among peers in Q3, "recovery is prolonged"

Prefers rival Sapphire Foods SAPI.NS, which also operates Pizza Hut and KFC, on more attractive valuations

Elara Capital ("buy"; PT: 215 rupees): Pizza Hut's same-store sales decline of ~1% y/y already on a low base given last year's ~12.6% drop

Says Devyani to focus on improving unit economics, moderately expand store count

Emkay ("reduce"; PT: 170 rupees): While growth turnaround is built into estimates, signs of initial recovery not seen yet for rating upgrade

Says co's average daily spend was flat y/y vs a moderate increase reported by SAPI, in part due to DEVY's lower presence in metros where demand was better