Devyani International Boosts Sky Gate Stake to Strengthen QSR Portfolio

Devyani International Boosts Sky Gate Stake to Strengthen QSR Portfolio

Devyani International ramps up its investment in Sky Gate Hospitality, reinforcing its presence in India’s fast-growing quick service restaurant segment.

Devyani International Ramps Up Investment in Subsidiary Sky Gate Hospitality

Devyani International Ltd. drew renewed market interest following its announcement to substantially elevate its shareholding in Sky Gate Hospitality Pvt. Ltd., a company under its umbrella. This calculated move is part of Devyani’s broader effort to cement its influence in India’s swiftly growing quick-service and culinary landscape. The firm plans to raise its ownership stake from 80.72% to 86.13%, committing an investment of up to ₹106.25 crore.

Despite the announcement, the company’s stock showed minimal movement on Monday, closing 0.03% higher at ₹166.75, marginally up from its previous close of ₹166.70. The firm’s market capitalization stood at ₹20,147 crore, underscoring its sizable presence in the Indian QSR landscape.

Details of the Transaction: Cash Investment in Tranches

To formalize this increased investment, Devyani International has entered into a series of binding agreements with Sky Gate and its founders. These include:

• A Share Subscription Agreement
• A Shareholders Agreement
• A Share Purchase Agreement with the founding promoters

The capital investment will be carried out via a monetary transaction, with the deal slated for completion no later than July 31, 2025. Notably, the deal may occur in multiple tranches depending on operational needs and strategic timelines.

Even though this qualifies as a related party transaction, Devyani clarified that the promoter group does not hold any direct stake in Sky Gate. Moreover, the deal is being carried out on an arm’s length basis, adhering to fair market practices and governance norms.

Sky Gate Hospitality: A Fast-Rising QSR Powerhouse

Sky Gate Hospitality, the entity receiving the capital boost, is a subsidiary of Devyani International and operates a dynamic portfolio of up-and-coming food brands in India’s QSR market. Among its key offerings are:

• Biryani By Kilo
• Goila Butter Chicken
• The Bhojan
• Get-A-Way
• Krazy Kebab Co.

These brands are steadily gaining recognition and contributing to Sky Gate’s rising footprint. As of March 31, 2025, the company reported an unaudited consolidated turnover of approximately ₹277 crore, excluding the performance of two operational units. Its paid-up capital stood at ₹20.23 lakh, reflecting a lean but agile capital structure.

Strategic Rationale Behind the Equity Infusion

The primary goal behind Devyani’s increased investment is to fuel Sky Gate’s expansion, support its subsidiaries, and provide working capital for general business operations. The move aligns with Devyani’s broader mission to diversify and scale its restaurant holdings beyond its core legacy brands.

The added capital is expected to:

• Accelerate brand development and outlet expansion
• Enable investments in technology, supply chain, and talent acquisition
• Drive innovation in menu offerings and customer experience

By enhancing its shareholding, Devyani International not only reinforces its control over Sky Gate but also positions itself to leverage future growth in the QSR space, especially among mid-premium and delivery-first brands.

Devyani International: A Longstanding Force Shaping India’s Rapid-Serve Culinary Landscape

Incorporated in 1991, Devyani International has long been a major player in India’s organized foodservice industry. The company is known for operating iconic QSR brands such as:
• Pizza Hut
• KFC
• Costa Coffee
• Vaango

The firm has consistently expanded its national footprint by focusing on mall food courts, standalone outlets, and delivery-centric formats, keeping pace with evolving consumer preferences. Devyani’s recent decision to expand its ownership in Sky Gate underscores its broader vision to strengthen dominance across both established and rising segments of the food industry.

Market Response: Modest but Optimistic

Though the immediate stock market reaction was subdued, the development is viewed by market watchers as a long-term positive. Investors and industry observers see this as a sign of Devyani’s commitment to growth through strategic investment and portfolio diversification.

The stability in share price also suggests that the market had likely anticipated the move or factored in Devyani’s ongoing efforts to bolster its secondary brand portfolio. As execution progresses and Sky Gate’s performance strengthens, a more pronounced stock re-rating may occur.

Final Thoughts

Devyani International’s decision to increase its equity stake in Sky Gate Hospitality signals a strong commitment to its QSR growth agenda. By investing over ₹100 crore to lift its holding to 86.13%, the firm is doubling down on a high-potential subsidiary with an expanding footprint in India’s foodservice market.

This move not only enhances Devyani’s influence over Sky Gate’s operations but also positions it to extract greater value from new-age, delivery-friendly food brands. With India’s appetite for diverse dining options growing rapidly, this strategic step is likely to yield operational and financial dividends over the coming years.

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The image added is for representation purposes only