The initial public offering (IPO) of Dreamfolks Services opened for subscription on August 24 to raise Rs 562 crore from the primary market. The company has set a price range of Rs 308 to Rs 326 per share. The lot size of Dreamfolks Services IPO is 46 shares for which it will cost Rs 14,996. A retail investor can submit bids for up to 13 lots by spending Rs 1,94,948. The public offer will close on August 26, 2022.
Dreamfolks Services is a dominant player and the largest airport services aggregation platform in India, an industry incubator with its unique asset-light and capital-efficient business model. The company’s first mover advantage in the lounge access aggregator industry in India has enabled it to become a dominant player with over 80% share in the domestic lounge access market. Furthermore, it has partnered with various entities to facilitate access to around 57 restaurants and F&B outlets at 18 airports across India. Dreamfolks Services will not directly receive any proceeds from the offering and all proceeds from the IPO will be received by selling shareholders.
Some brokerages gave the show a “Subscribe” rating. Here’s what they have to say.
KRChoksey Stocks and Securities | Subscribe
As the air travel industry recovers strongly from the uncertainties related to Covid-19, the brokerage firm is optimistic that the company is well prepared for the growth opportunities ahead due to its market dominance. The company has also expanded its presence in the international air show market by improving its touch points. KRChoksey believes it is important for the company to expand into domestic and international lounge services by expanding its partnerships with card issuers and other service providers.
Angel One | Subscribe
In terms of valuations, the post-issue price-to-earnings (P/E) ratio stands at 104.8 times FY22 EPS (at the upper end of the issue price range). However, the multiple looks higher primarily due to lower profitability caused by the industry-wide issues related to the pandemic. Dreamfolks Services enjoys a 95% market share and enjoys a first mover advantage in the segment. It is an asset-light business model that has won favor among air travellers. Additionally, the company focused on diversifying and increasing its service portfolio. Thus, the brokerage has a “Subscribe” rating on the issue from a medium to long-term perspective.
Investmart swastika | Subscribe (only for high risk investors)
Despite light asset operations, the company experienced volatile cash flow due to high receivables. The nature of the issue is OFS which will result in a 33% dilution of the sponsor’s stake and premium valuations (P/E of 104.82 based on FY22 EPS) make it suitable for long-term investors with a moderate to high appetite for risk.
Also Read: Dreamfolks Services IPO Opening August 24: GMP, Lot Size, Price Range & More