In FY 2022 the company has made total revenue of Rs 282.50 crores and PAT of Rs 16.25 Crores. EPS of the company for 6 months ended 30th September stands at Rs 0.21 however, on 31st March 2021, it was (0.28).
DreamFolks Services Limited originally incorporated under the name ‘ Believe Tradelink Limited’ on 24th April 2008. Later on 1st May 2015 the name of the company was changed to Dreamfolks Services Limited. The company is an airport services aggregator under which it provides a bouquet of airport services such as Lounge Access, Spa services, Food and Beverage services, Transit Hotel / Nap Room services, Doorstep Baggage Transfer, Meet and Assist and Airport Transfer service.
The company has an ‘Asset Light’ Business Model. DreamFolks acts a service provider between the lounge operators and banks, card networks and airlines and corporates. It captures clients with the help of global card networks which are present in Indian markets actively. Other than this Corporate clients and Airlines are big source of customer engagement for the company. The client base are as follows ~ Master card, VISA, Rupay, Diners Club International, Axis bank, HDFC bank, SBI Card, ICICI Bank, Kotak Mahindra Bank, IndiGo, Intermiles, Vi, EaseMyTrip, Air Asia, Hettich and Club Mahindra.
Customers use the debit/ credit cards, app or QR code to access the lounge services of the company along with other services at the airports. The card issuers, corporate clients and airlines helps the company in facilitating the customer base and then the company provides these services to the customers. It do not own any lounge but it just provides services through those lounges available at the airports.
The customers use the services of the company with one swipe of the debit / credit cards issued to them by the card issuers and the transaction amount comes into the account of the company.
Further for lounge business the company has tie-ups with all card issuers in India and these card issuers facilitate a steady customer base which are users of these lounge services. In cities such as Mumbai, Cochin, Ahmedabad and Bengaluru the company accounts for more than 80% of lounge.
Subsidiaries Of The Company
The company also has one subsidiary in the name of DreamFolks Hospitality Private Limited. It was incorporated in the name of VPN Hotels Private Limited in the year 2006. It is currently engaged in the business of Hospitality management services. The parent company DreamFolks holds 90% of shares in the subsidiary company.
India is an emerging country in the world with GDP growth of ~7%. In coming years the Indian Aviation Industry is expected to grow drastically. The government is highly focused on construction of second airport facility in the cities where one airport is already there. The best example to this is Navi Mumbai airport construction. Further, in past years its is observed that standard of living of people has increased enormously and therefore air travel and increase in the bandwidth of passengers in Air travel has increased. This is a beneficial scenario for the company. The domestic lounge market is expected to grow at a CAGR of 43.11%.
On company’s front, it is a dominant player into the market with its strong hold in domestic and global markets. It accounts for 97% of market share in domestic markets. Also the company do not have any listed peer competitor which presents it a first mover advantage & may result in novelty premium for the company’s stock. Pandemic had severe impact on the revenues of the company, but now it is recovering. Valuation is steep at > 100x. The stock is trading at 109 times currently. Company has proposed a price band of Rs 308 – 326 per share.
Use of Proceeds:
The IPO proceeds will not be received by the company. It is a 100% Offer for Sale.
Book running lead managers:
Equirus Capital pvt. Ltd., Motilal Oswal Investment Advisors Pvt. Ltd.
Liberatha Peter Kallat ; Chairperson and Managing Director, Mukesh Yadav; Non-Executive Director, Dinesh Nagpal; Non-Executive Director and Gityan Diwan; Chief Financial Officer.
|Year End March (Rs. in Crores)||2019||2020||2021||2022|
|Depreciation & Amortization||1.36||1.59||1.55||2.13|
|EBIT Margin %||8.88%||11.85%||-1.83%||7.23%|
|Interest & Finance Charges||0.40||0.71||0.75||1.43|
|Profit Before Tax||21.87||43.56||-0.20||20.48|
|Effective Tax rate||30.16%||27.26%||-621.39%||20.63%|
|Consolidated Net Profit||15.27||31.68||-1.45||16.25|
|Net Profit Margin after MI||6.20%||8.60%||-1.40%||5.80%|