Strong revenue, thin profits; macro headwinds cap outlook
The verdict, the claims that held up, the sharpest analyst exchanges, and the risks — the earnings call, decoded from the transcript.
Hold
confidence 7/10
Grade B
Met revenue guidance (+16.5% delivered vs prior 200-225 store guidance on track). EBITDA highest ever. Pizza Hut drag and thin PAT margin partially offset gains. Merger not yet closed.
Cautiously Optimistic
next 1–2 quarters
Optimistic
multi-year
Strong Q1 revenue and EBITDA beat guidance, with KFC momentum and own-brands acceleration offsetting Pizza Hut weakness. However, PAT margin of 1.1% despite 16.1% OPM signals thin operating profit conversion; macro headwinds (LPG, rupee, monsoon risk) and Pizza Hut turnaround delay to FY28 cap near-term upside. Merger and technology buildout remain execution risks.
₹1581 Cr
Revenue · +16.5% YoY₹17.1 Cr
Reported PAT · +667.7% YoYExpanding
Margins · vs guidance: CorroboratedDid the claims hold up?
highest ever EBITDA at 16.1% margin
METOperating EBITDA ₹255 Cr at 16.1% OPM (reported in opening remarks)
KFC 12% revenue growth, +3.3% SSSG
METKFC ₹684 Cr revenue (+12% YoY), SSSG +3.3% confirmed in segment detail
Pizza Hut improving sequentially, -2.2% SSSG
METPizza Hut ₹184 Cr, SSSG -2.2%, sequentially better; Brand Contribution -₹4 Cr (loss)
Brand Contribution 26% higher YoY, expanded 1.1% margin
METBrand Contribution ₹224 Cr consolidated (26% higher YoY confirmed), margin 14.2%
international business 20%+ growth
METInternational ₹523 Cr revenue, stated as 20%+ YoY growth
Earnings quality
What changed since the last call
Dine-in rebalance strategy
UpgradeKFC marketing spend shifted toward dine-in vs delivery discounting. Offline saliency 57% (Q1 last year ~54%, +3pp). Management now targeting 59-60%, claims consumers respond to better dine-in offer.
Management team overhaul (DIL 2.0)
UpgradeNew COO, CTO, CMO, PMO hired in past 2-3 months. Technology partnership with Cognizant. Early cultural/operational shifts visible in numbers; team settling in.
Pizza Hut strategy reset
DowngradeFrom defending via aggressive discounting to back-to-basics (product, innovation, ingredients). Real push deferred to FY28 post-merger. -2.2% SSSG, -₹4 Cr Brand Contribution. Structural 3-way governance blamed; solving post-integration.
Own brands (esp. Biryani By Kilo) long-term aspiration
UpgradeNew ₹1,000 Cr brand aspiration for BBK over next few years (prior: turnaround focus). Now testing dine-in, Express format, vegetarian, airport; positioning for major market opportunity (₹30-40k Cr biryani TAM).
Merger timeline & integration prep
NeutralFY27 end completion reaffirmed (on track). New team hired to ease post-integration. IT systems similar, processes aligned; integration risk low. Technology stack pre-build before approvals.
The Q&A
Analysts pressed hard on macro risk (oil, LPG, rupee, monsoon below-normal), slow SSSG outlook (why only 5-6% with 13 qtrs of negatives behind?), and Pizza Hut viability post-merger. Manish ceded macro headwinds but held discipline on margins and delivery roadmap. Not defensive but cautious; no over-promising on SSSG upside.
KFC margin drivers — Percy Panthaki, IIFL Securities
PartialADS is key lever (target 105-110k ADS for 20% margins in 1.5-2yr). Dine-in channel push, tech adoption (post-merger), operating leverage. Cost inflation managed via efficiency gains; timelines fluid based on macro.
SSSG outlook conservatism — Vivek Maheshwari, Jefferies
AnsweredMacro tough (rupee, oil, LPG availability, monsoon risk). Demand stable but not bullish environment. Hence 5-6% cautious stance despite low base. No stable macro environment visible.
Dine-in vs delivery trade-off — Vivek Maheshwari, Jefferies
AnsweredPost-COVID hypothesis wrong. Delivery now cannibalizes dine-in; must reposition for experience, margins. Consumers respond when dine-in is differentiated. Better unit economics at dine-in stores.
Pizza Hut viability & strategy — Vivek Maheshwari, Jefferies
AnsweredNothing wrong with brand (defensible #2 position). Issue was 3-way structure hampering decisions/innovation. Now correcting basics, innovation. Real push FY28 post-merger. ADS very low vs Domino's; need differentiated offering.
BBK & own brands growth path — Devanshu Bansal, Emkay Global
AnsweredBBK acquisition case turnaround achieved; ₹1,000 Cr brand aspiration next few years. Testing dine-in, vegetarian, airport. Vaango South Indian opportunity; stabilizing product. Both bullish long-term.
KFC global innovation localization — Devanshu Bansal, Emkay Global
AnsweredAll initiatives will come to India. Kwench most advanced (discussions on, capex, optimization done). Sauces/boneless follow once Kwench established. Capex differently managed in Western vs India markets.
Merger synergies & leadership capability — Praful Kumar, Dymon Asia Capital
AnsweredPromoters very bullish; model is Varun Beverages (another group listed entity). Team fully in place (COO, CTO, CMO hired 2-3wk to 2mo ago), settling well. Merger FY27 end on track. IT/process alignment easy; tech buildout pre-launch. Cognizant partnership for faster rollout.
Dine-in capex implications — Chetan Thacker, M3 Investment
AnsweredNo capex change. Pre-COVID: <10% delivery, now 45-46%. Stores already smaller, have excess capacity. Can shift dine/delivery mix without new capex. Brand standards met. Throughputs smaller per store, more store count.
Pizza Hut menu & innovation strategy — Chetan Thacker, M3 Investment
PartialWorking on product, ingredients, innovation. CMO (Sandeep) leading. Lead time exists. By merger close, recipe ready. Post-integration when structure sorted, real Pizza Hut push. Entry price attractive, middle menu work in progress.
IT systems integration risk — Chetan Thacker, M3 Investment
AnsweredNot a big challenge. Yum! controlled tech; both entities on same stack. Processes very similar. Integration will not be difficult. IT technical debt minimal.
Guidance
FY27 store openings: 200-225 net new (maintained from prior guidance)
HighQ1 added 14 net new stores (11 KFC, 3 BBK India). On pace for full-year guidance. BD consolidated under one leader; reassessing store opening strategy/landlord approach (DIL 2.0).
KFC Brand Contribution margin path to 20% via ADS 105k-110k (1.5-2yr timeframe)
MediumCurrent ~17% KFC margin. Drivers: 5-6% SSSG + new store quality (higher ADS starts) + dine-in channel promotion + operating leverage. Assumes stable macro (cost inflation managed).
Pizza Hut turnaround deferred to FY28 post-merger; near-term stabilization focus
MediumQ1 SSSG -2.2%, Brand Contribution -₹4 Cr. Working on basics/innovation. Real margin improvement push FY28 when 3-way governance resolved.
No incremental capex for dine-in/delivery format shift
HighExisting stores have excess capacity. Delivery was <10% pre-COVID, now 45-46%; stores already downsized. Shift within format without new spend. Future store opens same format as current.
Risks the call surfaced
Macroeconomic headwinds
MediumLPG prices up significantly (April-May crude pushed costs), rupee under pressure, monsoon forecast below-normal. RBI moderated FY27 growth outlook to 6.6%, raised inflation to 5.1%. Consumption recovery non-linear.
Pizza Hut turnaround delay
MediumPizza Hut SSSG -2.2%, Brand Contribution -₹4 Cr loss this quarter. Management cites 3-way governance structure (Devyani-Sapphire-Yum!) hampering decisions/innovation. Real turnaround push deferred to FY28 post-merger. Brand is #2 nationally but profitability weak; right-sizing ongoing.
Merger integration execution
MediumMerger with Sapphire Foods expected to close by FY27 end (on track with regulatory approvals from NSE/BSE received in June). Technology platform buildout critical lever; outsourced to Cognizant with core in-house team. Post-integration complexity high; two organizations, different systems/processes to align.
Thin PAT margin conversion
HighPAT ₹17.1 Cr (1.1% NPM) vs EBITDA ₹255 Cr (16.1% OPM). 1,475 bp gap indicates high financing costs, taxes, depreciation. Despite strong revenue/EBITDA growth, bottom-line profit remains thin. YoY 667% PAT growth is off tiny ₹2.4 Cr base (Q1 FY26). Raises question on true profitability/dividend capacity.
SSSG growth deceleration risk
MediumManagement guiding 5-6% KFC SSSG forward despite 13 qtrs of prior negatives; very cautious despite low comps. KFC Q1 +3.3% is below guidance range. Analysts pressed why not more bullish with such easy comparisons. Macro uncertainty cited. Aggregator platform competition cannibalizing dine-in.
Management
Score 7/10. Clear on strategy (DIL 2.0, dine-in rebalance, merger prep, own-brands focus). Transparent on challenges (Pizza Hut structure, macro headwinds, technology buildout risk). Caveated SSSG outlook rather than over-promising; cautious but credible tone. On track on store guidance (14 net new Q1, 200-225 FY27 pace maintained). KFC momentum visible (+3.3% SSSG, 57% dine-in, margin expansion). Pizza Hut still in reset (negative Brand Contribution, structural issues not solved until post-merger). Merger timelines reaffirmed but not yet closed.
1 · Q2 FY27 (Jul-Sep 2026)
KFC SSSG sustain 5-6%, Shravan/Navratri seasonal lift for Biryani By Kilo
2 · Q3-Q4 FY27
Merger regulatory approvals, Sapphire Foods integration commencement
3 · FY28 (Apr 2027+)
Pizza Hut full turnaround push post-merger, product/pricing innovation rollout
Merger and technology buildout remain execution risks.
Devyani Q1 FY27: revenue +16% YoY, consolidated PAT swings to ₹17 Cr on margin gains
PAT +667.6% YoY · revenue +16.47% · margins expanding · inline vs street
₹1,580.52 Cr
+16.47% YoY
₹17.1 Cr
+667.6% YoY
1.07%
+0.9pp YoY
₹0.12
Devyani International's consolidated Q1 FY27 print is a margin-led recovery on a tiny profit base. Revenue from operations rose 16.5% YoY to ₹1,580.5 Cr and profit for the period jumped to ₹17.1 Cr (of which ₹14.6 Cr attributable to owners) from just ₹2.2 Cr a year ago — a near-8x gain that looks dramatic only because the year-ago base was thin. The more meaningful signal is margins: operating margin expanded to ~16.2% (from ~15.2% YoY and ~15.3% last quarter) and net margin to ~1.1% (from 0.16% YoY), as revenue outgrew cost of materials and other expenses. Sequentially it is a clean turnaround — Q4 FY26 was a ₹9.8 Cr consolidated loss — though Q1 is not a peak-seasonal quarter for QSR, so YoY remains the fairer read.
Q1 FY-2027 vs prior quarters
Standalone tells a softer story: revenue up 8.9% YoY to ₹998.5 Cr and PAT ₹8.5 Cr (+37%). The gap between +16.5% consolidated and +8.9% standalone topline growth is the Sky Gate Hospitality consolidation (acquired June 2025, now wholly owned) plus international operations, which are pulling the group line ahead of the domestic KFC/Pizza Hut base — worth flagging since both numbers are public.
The stock went into the print at ₹118.92, up 6.8% over the past month of trading.
For context: this is the second-highest quarterly PAT of the last 6 quarters; PAT has now risen for 3 consecutive quarters; revenue is at a 6-quarter high.
What the summary numbers don't show
No exceptional items this quarter — clean YoY compare (FY26 one-offs sat in the full-year, not Q1)
Consolidated EPS ₹0.12 (basic), vs ₹0.03 YoY
Devyani International expects to add approximately 200-225 net new stores in FY27 on a standalone basis, with KFC contributing significantly. The company is focused on disciplined expansion, stronger profitability, and deeper consumer relevance through innovation and digital engagement. The proposed merger with Sapphir
— This quarter: met
Against street, no Q1-specific consensus was published, but analysts model 15–18% FY27 revenue growth and 15–20% PAT growth for well-placed QSR names; the +16.5% consolidated topline lands squarely inside that band, so the print reads inline rather than a surprise. Management's last-call framing — 200–225 net new standalone stores in FY27, 'stronger profitability,' and the Sapphire Foods merger on track — is directionally confirmed on the profitability axis this quarter; the notes reiterate the Sapphire scheme (appointed date 1 April 2026, approvals pending) and record the NCLT First Motion Order (23 July 2026) for the Sky Gate amalgamation, alongside the stake increase in DID to 56.7% during the quarter. The synergy timeline (₹210–225 Cr annual, per street) from Sapphire remains the key unquantified catalyst not yet in these numbers.
W1
Sapphire Foods synergy realisation — street models ₹210–225 Cr annual; none in this ₹17 Cr quarter yet
W2
Net store additions vs FY27 guidance of 200–225 standalone stores (KFC-led)
W3
Whether ~16.2% OPM holds/expands as merger integration and international costs flow through next quarters
Digitally clear text-PDF. Consolidated PBT 22.92 Cr is after +0.06 Cr JV share; no exceptional items this quarter (prior-year exceptionals sat in FY26 full-year only, not Q1). Consolidated PAT 17.10 Cr = owners 14.65 Cr + NCI 2.46 Cr; no discontinued ops this quarter. Base for YoY PAT is tiny (2.23 Cr) so % is very large but absolute profit still small.
Record EBITDA, Razorthin Profits—the Gap That Defines This Quarter
Revenue and operating profit both hit all-time highs, but the ₹17.1 Cr net profit tells a different story. A 1,475 basis point gap between OPM and NPM reveals a hidden leverage burden that the merger is supposed to solve—and the street is reconsidering.
Devyani International delivered a quarter that reads beautifully on the top line and cracks apart on the bottom. Revenue grew 16.5% to ₹1,581 Cr, EBITDA hit an all-time high of ₹255 Cr at a 16.1% operating margin, and the company guided steadily on expansion (200–225 net new stores for FY27, maintained). Yet net profit arrived at ₹17.1 Cr, a razor-thin 1.1% net profit margin despite that fortress EBITDA. The 1,475 basis point gap between operating margin and net margin tells the real story of the quarter: this is not a business problem, it is a balance sheet problem. And it is one the merger is supposed to solve.
₹1,581 Cr
+16.5% YoY; ₹255 Cr EBITDA at 16.1% OPM (highest-ever)
₹17.1 Cr
1.1% NPM; +667.7% YoY (off ₹2.4 Cr base Q1 FY26)
1,475 bp
Financing, tax, depreciation burden unresolved
₹224 Cr
+26% YoY at 14.2% margin; KFC +22%, Pizza Hut -₹4 Cr loss
The Profit Conversion Problem
To understand the gap, start with EBITDA. At ₹255 Cr, it is a commanding 16.1% of sales—the highest the company has posted. But by the time you subtract depreciation, interest, and taxes, ₹238 Cr has vanished. That suggests either very high financing costs (likely, given the leverage used for Pizza Hut and the Biryani By Kilo acquisition), or very heavy depreciation from recent capex. The company has not broken out the bridge in sufficient detail, but the math is inescapable: for every rupee of EBITDA, only ₹0.067 reaches net profit. Prior year (Q1 FY26) was worse at ₹2.4 Cr, so the year-on-year jump looks explosive at +667%—but it is a recovery from a tiny base, not proof of margin improvement.
Claims vs. Reality
Highest-ever EBITDA at 16.1% margin
₹255 Cr EBITDA at 16.1% OPM; confirmed in opening remarks
Supported
KFC 12% revenue growth, +3.3% SSSG, dine-in strategy working
₹684 Cr revenue (+12% YoY), SSSG +3.3%, 57% dine-in salience (+3 pp YoY), Brand Contribution ₹115 Cr (+22% YoY)
Supported
Pizza Hut improving sequentially, working on turnaround
₹184 Cr revenue, SSSG -2.2% but better QoQ, Brand Contribution -₹4 Cr loss, turnaround explicitly deferred to FY28 post-merger
Partially supported
Brand Contribution 26% higher YoY, margin expanded 1.1 pp
₹224 Cr consolidated (+26% YoY), margin 14.2%; supported
Supported
KFC ADS target 105–110k for 20% margins in 1.5–2 years
Stated in guidance; no refresh on timeline or confidence
Reiterated, not upgraded
Merger on track for FY27 close; integration risk low
Regulatory approvals received (NSE, BSE June 2026); new COO, CTO, CMO, PMO hired to lead integration; IT systems aligned
On track; execution risk remains
What Changed on This Call
Dine-in rebalance accelerating: KFC offline saliency now 57% (vs ~54% prior year), target 59–60%. Marketing spend shifted from delivery discounting to in-store experience.
DIL 2.0 management overhaul: COO, CTO, CMO, PMO hired in past 2–3 months; technology partnership with Cognizant for platform buildout pre-merger close.
Biryani By Kilo (BBK) long-term aspiration raised: new ₹1,000 Cr brand target over next few years (prior: turnaround focus). Testing dine-in, Express, vegetarian, airport formats.
Pizza Hut turnaround strategy reset and deferred: moving from aggressive discounting to back-to-basics (product, innovation, ingredients). Real push explicitly deferred to FY28 post-merger.
FY27 store guidance maintained: 200–225 net new stores (not upgraded). Q1 added 14 net new (11 KFC, 3 BBK India); on pace.
The Bull-Bear Ledger
KFC momentum visible: +3.3% SSSG, +3 pp dine-in salience (57%), Brand Contribution +22% YoY. Margin expanding toward 17% (target 20% in 1.5–2 years via ADS growth).
Own brands (BBK, Vaango) emerging as growth engines: BBK +7.2% SSSG, Vaango +7.1% SSSG. Brand Contribution ₹10 Cr (10.2% margin). ₹1k Cr BBK aspiration signals confidence in ₹30–40k Cr biryani TAM.
International business sustained: ₹523 Cr revenue (+20%+), consistent strong growth. Brand Contribution 18.2% margin (+1.5 pp YoY).
Merger integration prep solid: regulatory approvals done, new team in place, IT systems aligned, technology buildout pre-launch. FY27 end close on track.
EBITDA conversion to PAT broken: 1,475 bp gap suggests high leverage/tax burden. Limits dividend capacity and reinvestment firepower until balance sheet is optimized post-merger.
Pizza Hut loss drag and delayed turnaround: Brand Contribution -₹4 Cr, SSSG -2.2%, 626 stores right-sizing ongoing. Real profit push deferred to FY28. Structural 3-way governance issue unresolved until merger close.
SSSG guidance capped at 5–6% despite 13 quarters of negatives and Q1 +3.3% actual: cautious stance justified by macro headwinds (LPG inflation, rupee pressure, monsoon below-normal), but may underestimate recovery.
Macro headwinds persist: LPG cost inflation (April–May crude spike), rupee pressure, monsoon forecast below-normal. RBI moderated FY27 growth to 6.6%, raised inflation to 5.1%. Consumption recovery non-linear.
Technology buildout pre-merger execution risk: CTO recently hired, Cognizant partnership for platform. Critical for post-merger synergies but timeline and delivery confidence not fully tested.
Risks, Ranked by Concern
Thin PAT margin despite fortress EBITDA
High1,475 bp gap between OPM and NPM means ₹238 Cr of EBITDA is lost to financing, depreciation, and tax. This is not operating weakness—it is balance sheet leverage. Until the merger closes and debt is refinanced/reduced, earnings accretion will remain capped. The company will struggle to fund growth or pay meaningful dividends from operating cash.
Pizza Hut turnaround delay and structural drag
HighPizza Hut is the #2 pizza brand nationally but lost ₹4 Cr in Q1 (Brand Contribution). SSSG -2.2% and right-sizing ongoing. Management blames 3-way governance (Devyani-Sapphire-Yum!) and has explicitly deferred real turnaround push to FY28 post-merger. If integration complexity exceeds expectations, or if the brand has structural weakness beyond governance, the drag could persist into FY28.
Macro deterioration (LPG, rupee, monsoon)
MediumLPG inflation and rupee pressure are visible in input costs. Monsoon forecast is below-normal, which could dampen consumer discretionary spending. Management guided conservatively on SSSG (5–6%) partly because of this. If macro deteriorates further (oil spike, rupee weakness, weak monsoon), SSSG could fall below guidance and margin expansion plans could slip.
Merger integration execution
MediumFY27 end close is on track (regulatory approvals done), but integration risk remains. New COO, CTO, CMO, PMO are settling in. Technology platform buildout is outsourced to Cognizant. If IT integration slips, post-merger synergies (cost savings, cross-selling, leverage reduction) could be delayed. This defers the PAT margin fix.
SSSG conservatism masks demand uncertainty
MediumAfter 13 quarters of SSSG negatives, guidance of just 5–6% forward seems cautious. Management cites macro as the reason, but it raises the question: is demand recovery truly stalled, or is the company underestimating it? If SSSG accelerates above 6%, the stock could re-rate upward; if it falls below 5%, that's a surprise to the downside.
How the Street Is Positioned
The stock price recovered by day 5 after the result, but the path reveals hesitation. The day-1 pop of +0.14% (announced Wed Jul 29 at ₹118.36 pre-result) had faded to −1.35% by day 3, then rebounded +5.69% by day 5. The message: initial relief, then pause, then value-hunting re-entry. The RSI is now 75.4 (overbought), and the stock sits 15.14% off its all-time high of ₹169.4, trading at ₹143.76 well above its 50-day (₹122.72) and 200-day (₹116.75) SMAs. From the 52-week low of ₹91.55, it has rallied +57.03%—a substantial recovery.
Ownership flows tell a different story. FII ownership ticked down by 68 basis points in Q1 FY27 to 6.81% (from 6.13% in Q4 FY26). This is a trimming, albeit modest. DII also retreated 48 bp to 18.85%. Promoters held steady at 61.36%. The FII trim, coupled with the overbought RSI, suggests institutional investors took profits on the bounce. That is a yellow flag for near-term momentum.
Valuation context: The stock is trading well above key moving averages but has given back 15% of its ATH. The post-result fade and recovery suggest the market was pricing in guidance uplift or a forward earnings surprise—and didn't get it. Management reiterated rather than raised guidance, which is a miss for momentum traders. The 5-day rebound suggests value investors see ₹140s as a re-entry, but it is not clear whether that is sustainable without a catalyst (merger close, Pizza Hut stabilization, Q2 SSSG surprise).
The Debate
1 · Merger regulatory final approval and close timeline
Regulatory approvals are done (NSE, BSE). Watch for shareholder vote and close announcement (target FY27 end, so within 2–3 months). Any slippage or unexpected regulatory hurdles would delay the PAT margin fix and technology buildout.
2 · Q2 KFC SSSG sustain above 5–6% guidance
Q1 delivered +3.3%, which is solid but below the guidance band. Q2 (Jul–Sep) is Shravan/Navratri season, a peak for QSR in India. Management targets 5–6%; watch if it holds. If SSSG falls below 5%, that signals demand recovery is fragile. If it exceeds 6%, that validates the dine-in rebalance thesis and could support a re-rate.
3 · Pizza Hut stabilization: ADS, customer count, Brand Contribution
Pizza Hut is still right-sizing and loses money. Watch for stabilization signals in Q2: Is ADS rising toward ₹35k+? Are customer counts stabilizing? Is the Brand Contribution loss shrinking? If Pizza Hut is deteriorating further despite the product reset, the turnaround thesis is at risk.
4 · PAT margin expansion path post-merger
The 1,475 bp gap between EBITDA and NPM must narrow post-merger. Management should provide a bridge: How much of the gap is financing cost, D&A, and tax? What is the merger synergy roadmap for deleveraging and cost reduction? This is the number that separates a 5–6% dividend yield story from a 2–3% one.
Devyani International posted a solid quarter on the surface—revenue beat guidance, EBITDA hit a record, KFC is working. But the ₹17.1 Cr net profit, at just 1.1% margin, is the truth underneath. The company has built a good operating business (16.1% EBITDA), but it is being crippled by financing and tax burden. The merger is designed to fix that by refinancing debt and unlocking cost synergies. Until that close (expected within 2–3 months), earnings accretion will remain capped.
The stock's post-result bounce-and-fade (day 3 −1.35%, day 5 +5.69%) and overbought RSI suggest institutional investors are neither bullish nor convinced. The FII trim and the lack of guidance uplift are yellow flags for momentum traders. But for holders, the thesis remains intact: KFC momentum, own brands scale, merger close, and a 5-year payoff on the balance sheet fix.
The number to track from here is EBITDA conversion to PAT post-merger, and the catalyst is the Q2 SSSG print. If KFC sustains above 5–6% and Pizza Hut does not deteriorate further, the stock has a clear path to ₹160–170 post-merger (on a normalized 12–14x forward EBITDA multiple, assuming debt reduction). If macro worsens or Pizza Hut drags further, risk is back to ₹120. Hold for the long-term optionality, but be patient on near-term catalysts.