Which adjacencies you mean?

Devyani International ( master franchise of KFC, PizzaHut, Costa Coffee ) – H1 / Q2 highlights –

Have opened 115 new stores in H1 taking the total store count to 1358. Company has stores in over 240 cities / towns in India

H1 sales @ 1666 cr, up 15 pc
Gross Margins @ 71 vs 70.5 pc YoY
EBITDA @ 332 vs 330 cr (margin @ 19.9 vs 22.7 pc )
Adjusted PAT – 93 vs 136 cr (adjusted for currency devaluation of Rs 61 cr in Nigeria business)

Brand wise sales breakdown –

KFC – 1025 cr, up 18 pc
Pizza Hut – 367 cr, up 6 pc
Costa – 67 cr, up 69 pc
Rest – others like Vango etc

New stores opened in H1 –

KFC – 50
Pizza Hut – 29
Costa Coffee – 34
Vaango – 01

Total overseas stores –

KFC – Nigeria – 38
KFC – Nepal – 22

Nigeria facing severe economic head winds. Company may have to support its Nigerian operations for some time to come (1-2 yrs)

Aim to reach 2000 stores by 2026 end. To open another 150 odd stores this year

Current stores breakdown –

KFC – 594
Pizza Hut – 539
Costa Coffee – 146
Rest – others like Vaango

Q2 is generally a seasonally weak Qtr. High food inflation also had a dampening effect on QSR industry in Q2

Seeing good demand on the days of big WC matches. As such, Q3 is a good Qtr

Company has formed a JV with RK associates and Hoteliers to tap the Railway modernisation plan of GoI by setting up new Outlets at the Station’s food courts

Company has announced a deal with PVR to Open Costa Coffee outlets at their premises. Contours of the deal are not fully known

Expecting an EBITDA margin uptick of 2-3 percentage points once the inflationary pressures are gone and consumer sentiment improves

Vaango currently contributes to 3 pc of sales

Yum brands ( the owner of KFC, Pizza Hut, Costa Coffee brands ) also spends on Marketing to help the company specially when the demand scenario is weak

Disc: hold a small tracking position, biased, may add more if the company performance improves in Q3/Q4

I hold Astral and started tracking position in Cera. Recently attended Astral Call, and the promoter is saying to give them 10 years to fully get the benefit of a consistent compounder. Cera is going into adjacencies and becoming strong player and capturing the market share, slowly but permanently. Both are good and promising companies. About Cera, I am only concerned with current valuations, whether today is better to enter or wait for some.correction.

Cera Vs Astral
I am also doing some reading around building material segment though i am aware I have missed chance in this cycle and whatever efforts I put will only be helpful in the next cycle whenever that starts

As a long term investor whenever in doubt- I always think about transaction in terms of entire business than buying piece of the business

And therefore – the question I am trying to find out which strategy is better?

1. Creating a brand and leverage that brand to enter multiple segments in building materials like astral
2. Focus on the existing segments and try to go deeper by focusing on product design like cera

Cera always try to maintain their exposure to ‘projects’ business to around 35% and rest of the 65% business is focussed on consumers through their dealer network. Strategy is to build brand recall by focusing on product design and innovation. According to their claim new entrants in the sanity-ware and faucet-ware from “pipe industry” are focussing on “project” segment which mainly driven by pricing

On the other side Astral also claims that they are investing heavily in product studios especially for their faucetware and sanityware portfolio to target mind share of end customers. So far for their products the decision makers were – plumbers, contractors etc but not end customers

More I will study both companies in coming months, hopefully i can answer above question. My natural inclination is always towards companies embracing “focussed aggression” – be it ajanta, be it suprajit or vinati. Therefore my bias is towards owning Cera over Astral for next cycle. I will keep this thread updated as when I gain more insights

I would like to know – the alternative to Qatar if the Gas contracts are not renewed due to certain non-economic reasons by GOI? Which are those other sources of the Gas for importing? Will those nations give Gas at lower rates?
Also, would like to know the impact of above 20K investments on Top Line and Bottom Line, as my understanding is limited in this sector.

Invested due to good Dividend Yield and undervalued stock price few years back, but no major gains so far.