The initial public offering IPO of Dreamfolks Services was open for subscription on August 24 to raise Rs 562 crore from the primary market. The price band is between Rs 308 and Rs 326 per share. The lot size of Dreamfolks Services IPO is 46 shares, for which one will have to spend Rs 14,996. A retail investor can submit bids for a maximum of 13 lots by spending 1,94, 948. The public offer will close on August 26, 2022.
Dreamfolks Services is a dominant player and India's largest airport service aggregation platform, an incubator of the industry with its unique, asset-light, capital-efficient business model. The company has a share of over 80 per cent in the domestic lounge access market because of its first mover advantage in the lounge access industry in India. It has partnered with various entities to allow access to around 57 restaurants and F&B outlets at 18 airports across India. Dreamfolks Services will not receive any proceeds from the offer, and the entire proceeds of the IPO will be received by the selling shareholders.
Here s what they have to say.
The brokerage is optimistic that the company is well-positioned for the upcoming growth opportunities owing to its market dominance, as the air travel industry recovers sharply from the Covid 19 uncertainties. The company has been expanding its presence in the international air lounge market by improving its touch points. KRChoksey believes that it is important for the company to grow in domestic and international lounge services by expanding its partnerships with card issuers and other service providers.
The post-issue price-to- earnings P E works out to 104.8 times FY 22 EPS at the upper end of the issue price band. The multiple looks higher due to lower profitability caused by the pandemic-led industry-wide issues. Dreamfolks Services enjoys a 95 per cent market share and enjoys an early mover advantage in the segment. It has gained the preference of air travel with the addition of an asset-light business model. The company has focused on diversifying and increasing its services portfolio. The brokerage therefore has a purpose.
The company has seen volatile cash flows due to high receivables despite the asset-light operations. The nature of the issue is OFS which will lead to a 33 per cent dilution of the promoter's stake and premium valuations P E of 104.82 based on FY 22 EPS, making it suitable for long-term investors with moderate to high risk appetite.