DreamFolks Services Limited - IPO Note

Airlines Services

DreamFolks Services Limited - IPO Note

Airlines Services

Price range
Rs. 308 - 326
Issue Period:
Aug 24, 2022
Aug 26, 2022
August 25, 2022

Stock Info

CNX Nifty
Face value (Rs.)
Market lot
Issue size
Rs. 562 cr.
Public Issue
1.72 cr. shares
Market cap post IPO
1703 cr.
Equity Pre - IPO
5.25 cr.
Equity Post - IPO
5.25 cr.
Issue type
Offer For Sale

Shareholding (Pre IPO)

Source: Ace equity, StockAxis Research

Shareholding (Post IPO)

Source: Ace equity, StockAxis Research

Key Strengths & Strategies:

  • DreamFolks Leverages Technology
    DreamFolks provides its lounge services to its clients through its omni channels such as app based access, where the customers can track the advantages, points earned and various available offers available in the app. The services can also be claimed through QR codes. For availing such services customers do not have to take membership of DreamFolks separately.
  • First Mover Advantage
    The first mover advantage coupled with service model of the company has helped it to become a dominant player in the lounge services industry. It’s tie-ups with renowned card networks, airlines and corporate clients has helped it in capturing high customer base. Along with large bouquet of services offered it has taken stringent steps to provide hassle free experience to its customers on technological grounds.
  • Increased Capacity of Services
    The company has a 100% in Lounge services in Indian airports and offers a unique value proposition to its clients. This appears to be repeat. As at 31st December 2021 the company has tie-ups with 6 restaurants and FB outlets at 19 airports across India. Company facilitates airport transfer services (pick-up and drop) at 47 cities in India and 145 cities globally.
  • Entering the Railways Lounge Sector
    In addition to providing Services at airports, recently, the company have also forayed into the railways sector and have entered into contracts to provide lounge access at 5 railway stations in India. These are New Delhi, Ahmedabad, Ernakulam, Madurai and Sealdah.
  • Card networks and profitability to DreamFolks
    DreamFolks has tie-ups with HDFC, SBI, ICICI and Axis bank. These banks have 23%, 19%. 18% and 12% market share in credit cards market respectively. However in debit cards market SBI have 35% share whereas HDFC, ICICI and Axis bank have 5%, 4% and 3% share respectively. These are the dominant players of cards networks industry and all of them are clients of DreamFolks from a long time. This is a strong point in rising customer base DreamFolks and studies show it will continue to row the revenues of DreamFolks because these card issuers are expected to grow drastically in coning times.
  • Long track record of existence & creating a category in industry
    Company’s existence is continued with impressive growth levels from past 14 years. It has made remarkable progress and significant innovations wherever necessary into its business. In Fiscal year 2020 the number of cities covered by the company were only 57. Currently, the cities covered by the company as at 31st December 2021 have grown to 534. Passengers served from FY 2020 to 31st December 2021 are approximately 97 lakh.
  • Ability to enter into new contracts and maintain the existing contracts
    The company has the ability to maintain existing contracts with the help of contract agreements issued and enter into new contracts as and when an opportunity arises. Through its dominant position into the market it is in a privileged position of capturing new opportunities smoothly and rigorously.

Financial Outlook

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).


  • The current issue is entirely an offer for sale (OFS) wherein promoters are selling some part of their stake. The proceeds of the offer will not be received by the company, rather it will directly go to the selling shareholders
  • The success of the company is dependent on its long term relationship with card networks, corporate clients and Airlines.
  • Currently, company has 5 clients which contribute to majority of revenue for the period ended 6 months. These clients are associated with the company for over a period of 3 years. Clients such as RuPay, ICICI Bank Limited, HDFC Bank Limited, Axis Bank Limited, and Standard Charter Bank. For the 6 month period ended 30th September 2021 top 5 clients contribute 82.46% to the revenue of the business. Whereas, top 10 clients contribute 97.87% to the revenue.
  • Any inability to compete efficiently will lead to lower market share and operating margins for the company.
  • Company incurred losses in the past due to its direct correlation with the air industry. The revenue from operations of the company depend directly on the travel trends in Airlines industry. In times of pandemic travel activities witnessed a downfall and therefore the revenue from operations witnessed a severe decline and company was in losses.
  • Pandemic had a severe impact on the company’s operations due to restrictions on travel. Any downfall in travel industry directly impacts the operations of the company.

Company Description

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 global footprint of the company through partnerships with other service providers has extended to 1416 touch points in 121 countries, out of which 244 Touch- points are in India and 1172 Touch- points are overseas, as at March 2022.
  • In the domestic lounge market the share of the company is around 95% - 97%.
  • As of 31st March 2022 the company had 50 clients through all sources and 97.9 lakh customers used its services since Fiscal 2020.

Business Model
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.

Key Information

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.

Financial Statement

Profit & Loss Statement:- (Consolidated)

Year End March (Rs. in Crores) 2019 2020 2021 2022
Net Sales 248.28 367.04 105.63 282.50
Growth % 47.83% -71.22% 167.43%
Employee Cost 12.03 17.93 12.64 16.55
Other Expenses 247.92 -17.93 -12.64 -16.55
EBITDA 23.41 45.09 -0.38 22.55
EBITDA Margin 9.43% 12.28% -0.36% 7.98%
Depreciation & Amortization 1.36 1.59 1.55 2.13
EBIT 22.05 43.50 -1.93 20.42
EBIT Margin % 8.88% 11.85% -1.83% 7.23%
Other Income 0.21 0.77 2.48 1.49
Interest & Finance Charges 0.40 0.71 0.75 1.43
Profit Before Tax 21.87 43.56 -0.20 20.48
Tax Expense 6.60 11.87 1.25 4.22
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%