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India's KFC and Pizza Hut operators Sapphire Foods India Ltd. and Devyani International Ltd. are coming together in a $934-million deal, creating a fast-food powerhouse in the world's most populous country.
KFC, Pizza Hut merger in India
Backed by US-based Yum! Brands Inc., which owns both KFC and Pizza Hut brands, the share-swap deal will see Devyani International issue 177 shares for every 100 shares of Sapphire Foods. The merger is expected to generate ₹210-225 crore annually from the second full year of operations, primarily due to lower royalty costs and reduction in corporate overheads.
“This combination will allow us to realise meaningful economies of scale, leverage a unified technology platform, and strengthen our supply-chain,” Ravi Jaipuria, non-executive chairman of Devyani International, said in a statement on Thursday (1 January 2026). “Together, these advantages will help unlock sustained value creation and long-term growth for all stakeholders.”
The full integration of the two entities, is expected to be completed within 15 to 18 months from the effective date of the merger.
Devyani-Sapphire Foods merger: Deal details
The Devyani-Sapphire Foods merger creates one of the largest and most diversified QSR platforms in India, according to JM Financial Ltd.
“Given the entire merger process will be done over a period of 12-15 months, we are currently not baking in the merger into our numbers,” JM Financial analysts led by Gaurav Jogani said in a 1 January 2026 note.
“Our back-of-the-envelope calculations result in a combined equity valuation of ₹38,700 crore, implying an upside of ~45% over current combined market capitalisation of ₹26,600 crore.”
The Devyani-Sapphire Foods merger comes as India's so-called quick-service restaurants grapple with higher cost and and slowing same-store sales and margin pressure, amid stiff competition from McDonald's and Domino's Pizza. The companies run over 3,000 outlets across India and overseas, including KFC and Pizza Hut dine-in restaurants.
To be sure, both the KFC and Pizza Hut operate at a net loss in India, making scalability a challenge, Akshay D'Souza, an independent consumer goods consultant, told Reuters.
“With the single entity, if they are able to unlock even half of the expected synergies, we will be seeing a profitable enterprise…where they can control costs better,” he said.
Devyani and Sapphire Foods financials
In the quarter ended September, Sapphire Foods' consolidated total cost rose 10% year-on-year to ₹768 crore while Devyani International's spends rose 14.4% to ₹1,408 crore.
Devyani reported a net loss of ₹21.9 crore in Q2 FY26, reversing a profit of ₹1,70,000 a year earlier. Sapphire Foods posted a consolidated net loss of ₹1.27 crore, compared with a loss of ₹3.04 crore a year ago.
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