Shares of Devyani International rose as much as 6.5% on Tuesday after the company's Dubai-based subsidiary Devyani International DMCC announced its entry into the Thailand market.

The operator of KFC and Pizza Hut quick-service restaurants in India signed a share purchase agreement and other transaction-related documents to acquire a controlling interest in Restaurants Development Co., Ltd. (RD) Thailand, through the acquisition of an equity stake in RD and its holding companies.

As of September 2023, RD operated a chain of 274 KFC restaurants across Thailand and employs more than 4,500 people.

Reacting to the development, shares of Devyani opened at ₹191 apiece on the National Stock Exchange (NSE) against their previous closing price of ₹183.05. The stock rose 6.5% to hit a high of ₹197.50 in intraday trade today, taking the company's market cap to ₹23,340 crore.

The QSR chain's stock has gained only 7.33% on a year-to-date basis and 3.34% over the past year.

Devyani International is the largest franchisee for Yum Brands (KFC & Pizza Hut) in India. It is also the sole franchise for the Costa Coffee brand and stores in India. In addition, Devyani owns the South Indian vegetarian food brand Vaango. It has a strong presence across airports in India where it serves a variety of F&B offerings. As of September 30, 2023, DIL operated over 1,300 stores across brands in 240 plus cities in India, Nigeria and Nepal.

The deal with Thailand's Restaurants Development is expected to close on or before March 31, 2024 and is subject to all customary regulatory and other approvals.

"This strategic venture into Thailand is a collaboration between Devyani International Limited and Temasek Holdings (Private) Limited, a global investment company headquartered in Singapore, with over SGD 380 billion in assets under management," it says in a stock exchange filing.

KFC in Thailand is franchised by Yum Restaurants International (Thailand) Co., Ltd, the subsidiary of Yum Brands, Inc. KFC is the largest QSR/LSR chain in Thailand.

"Thailand is a strong poultry market in its basket of meat consumption and we believe there is an opportunity available for the market to grow even further," the company says.

"In its pursuit of entering new geographies and simultaneously deepen its presence in existing locations, DIL is committed not only towards expansion of its footprint in Thailand but also ensuring and elevating the consumer's experience in the Thai market and serving local communities," the filing says.

This acquisition is expected to position Devyani International as a key player in the exciting QSR LSR market in Thailand and the region. It also paves the way for additional growth and expansion as Thailand is a high middle-income country with almost 70 million population and attractive consumption levels, the company says.

Devyani International stock

Devyani International jumps 6% after buying 274 KFC restaurants in Thailand