Dreamfolks Services Limited IPO
Please refer to important disclosures at the end of this report
1
Dreamfolks Services Limited (DFSL) is a dominant player and India's largest
airport service aggregator platform facilitating an enhanced airport
experience to passengers leveraging a technology driven platform. Company
follows an asset light business model that integrates global card networks in
India, card issuers and other corporate clients in India, including airline
companies with various airport lounge operators and other airport related
service providers on a unified technology platform. DFSL facilitates the
customers of its clients to access the airport related services such as Lounge,
Food & beverages, Spa, pick up and drop service amongst others. Company
has 100% market share in facilitating 54 lounges currently operational in India
and it also has over 95% market share of all India issued credit and debit cards
access to the airport lounges.
Positives: (a) Dominant player in the airport lounge aggregation industry in India
with strong tailwinds (b) Strong relationships with clients in card network and card
issuer space (c) Evolving services portfolio leading to increased cross selling benefits
for clients and indirectly increasing client stickiness for the company (d) Asset and
human resource light business model providing ability to scale business with less
incremental cash deployment.
Investment concerns: (a) Business possesses high key man risk (b) Slowdown in
Travel Industry (c) High Client and Revenue Concentration (d) Threat of airport
lounge operators forward integrating and tying up directly with card networks and
card issuers.
Outlook & Valuation: In terms of valuations, the post-issue P/E works out to
104.8x FY22 EPS (at the upper end of the issue price band). However, the multiple
looks higher mainly due to lower profitability caused by pandemic led industry wide
issues. DFSL enjoys a 95% market share and enjoys early mover advantage in the
segment. It has been an asset-light business model gaining the preference of air
travelers. Further, DFSL has focused on diversifying and increasing its services
portfolio. Thus, we have a SUBSCRIBE rating on the issue from a medium to long-
term perspective.
Key Financials
Y/E March (₹ cr)
FY'20
FY'21
FY’22
Net Sales
367
106
282
% chg
-71%
167%
PAT
32
(1)
16
% chg
-105%
1221%
EBITDA (%)
12.3
(0.4)
8.0
EPS (Rs)
6.1
(0.3)
3.1
P/E (x)
53.8
(1,174.7)
104.8
P/BV (x)
26.0
26.5
20.7
ROE (%)
48.4
(2.3)
19.8
ROCE (%)
63.4
(2.6)
22.6
EV/Sales
4.6
16.1
6.0
Source: Company RHP, Angel Research
SUBSCRIBE
Issue Open: August 24, 2022
Issue Close: August 26, 2022
Offer for Sale: ` 562cr
QIBs 75% of issue
Non-Institutional 15% of issue
Retail 10% of issue
Promoters 67.0%
Public 33.0%
Fresh issue: ` 0cr
Issue Details
Face Value: `2
Present Eq. Paid up Capital: ` 10.45cr
Post Issue Shareholding Pattern
Post Eq. Paid up Capital: ` 10.45cr
Issue size (amount): ₹ 562cr
Price Band: ₹308- ₹326
Lot Size: 46 shares and in multiple thereafter
Post-issue mkt. cap: * `1,609cr - ** `1,703cr
Promoters holding Pre-Issue: 100%
Promoters holding Post-Issue: 67%
*Calculated on lower price band
** Calculated on upper price band
Book Building
IPO NOTE
Dreamfolks Services Limited
August 23, 2022
Dreamfolks Services Limited | IPO Note
August 23, 2022
2
Company background
DFSL is a dominant player and India's largest airport service aggregator
platform facilitating an enhanced airport experience to passengers leveraging
a technology driven platform. Company follows an asset light business model
that primarily integrates global card networks in India, card issuers and other
corporate clients in India including airline companies with various airport
lounge operators and other airport related service providers on a unified
technology platform. Company has tie up with all the 5 card networks in India
including Visa, Mastercard, Diners/Discovery and RuPay, also the company has
tie-ups with India’s largest card issuers such as HDFC Bank, Kotak Mahindra
Bank amongst others.
DFSL facilitates the customers of its clients to access the airport related services
such as Lounge, Food & beverages, Spa, pick up and drop service amongst
others. Company currently has 1,416 total touchpoints of which 244
touchpoints are in India and 1,172 are outside India. Through these touchpoints
company facilitates its services to the customers of its clients.
Diverse range of Services:
1) Lounge Access: DFSL has 100% coverage of operational lounges in Indian
airports, and it offers a unique value proposition to its clients by enabling
access to the Consumers to a network of all operational airport lounges in
India. As of March 31, 2022, company had exclusivity to provide access to
12 domestic lounges across 11 airports in India constituting around 22.22%
of the total access of the domestic lounges for India issued credit cards and
debit cards. Revenue from lounge access services contributed on an
average 98.55% over FY20 to FY22 to the top line.
2) Food and beverage offerings: DFSL had tied up with various entities to
facilitate access to around 57 restaurants / F&B outlets at 18 airports across
India.
3) Spa Services: Consumers can avail of specified massage therapies such as
head, neck and shoulder massage, and foot reflexology. DFSL facilitates
access to this service in tie-up with O2 Spa Salon Private Limited.
4) Airport transfer services: DFSL facilitates airport transfer, i.e., airport ‘pick-
up and drop’ facilities in 47 cities across India and in 145 cities outside
India, as of March 31, 2022
5) Baggage Transfer: DFSL has tied up with a service provider to provide
baggage pick-up and drop-off facility to and from airports across
Bengaluru, Hyderabad, Mumbai, and New Delhi
6) Other: In addition to providing Services at airports, DFSL has also, in the
current Fiscal, forayed into the railways sector and, company has entered
contracts to provide lounge access at 8 railway stations in India.
Dreamfolks Services Limited | IPO Note
August 23, 2022
3
Issue details
The IPO is made up entirely of Offer for sale ₹562cr.
Pre & Post Shareholding
(Pre-Issue)
(Post-Issue)
Particulars
No of shares
%
No of shares
%
Promoter
5,22,49,900
100.0%
3,50,07,532
67.0%
Public
100
0.0%
1,72,42,468
33.0%
Total
5,22,50,000
100.0%
5,22,50,000
100.0%
Source: Company, Angel Research
Objectives of the Offer
◼ To carry out the Offer for Sale of 17,242,368 equity shares aggregate upto
₹562cr.
Key Management Personnel
Liberatha Peter Kallat is the Promoter and Managing Director of the Company.
She was designated as the Chairperson on November 30, 2021. She holds a
bachelor’s degree in science from Andhra University. She has been associated with
the Company since 2014 and is responsible for the strategy and overall
management of our Company. She has experience in the hospitality sector and has,
in the past, been associated with Indian and global multinational companies such
as Taj GVK Hotels & Resorts Ltd, PepsiCo. India, Premium Port Lounge Management
Company Private Ltd, and Pernod Ricard India (P) Ltd.
Balaji Srinivasan is an Executive Director and Chief Technology Officer of the
Company. He holds a diploma in software and systems management from NIIT,
New Delhi. He has been associated with the Company since 2019. He has
experience in the technology sector. Prior to joining DFSL, he held senior
management positions at start-up ventures such as FarEye and held the position of
Vice-President at Genpact India Private Limited. He has been awarded the Smart
Innovator Award 2019 at the Enterprise Innovation Summit 2019 in recognition of
his extraordinary ability to innovate that resulted in creating business value for the
organization and the Smart Innovator Award 2021 and Enterprise Innovation
Summit 2021 in recognition of the extraordinary efforts in technology innovation
that resulted in creating business value for the organization.
Dreamfolks Services Limited | IPO Note
August 23, 2022
4
Financial Summary
Income Statement (Consolidated)
Y/E March (₹ cr)
FY’20
FY’21
FY’22
Net Sales
367
106
282
% chg
-71%
167%
Total Expenditure
322
106
260
Raw Material
300
88
237
Personnel
18
13
17
Other Expenses
4
6
6
EBITDA
45
(0)
23
% chg
-101%
6064%
(% of Net Sales)
12.3
(0.4)
8.0
Depreciation & Amortization
2
2
2
EBIT
43
(2)
20
% chg
-104%
1157%
(% of Net Sales)
11.9
(1.8)
7.2
Interest & other Charges
1
1
1
Other Income
1
2
1
PBT
44
(0)
20
% chg
-100%
10287%
Tax
12
1
4
(% of PBT)
27.3
(621.4)
20.6
PAT
32
(1)
16
% chg
-105%
1221%
Basic EPS (Rs)
6.1
(0.3)
3.1
Source: Company, Angel Research
Dreamfolks Services Limited | IPO Note
August 23, 2022
5
Balance Sheet (Consolidated)
Y/E March (₹ cr)
FY’20
FY’21
FY’22
Equity Share Capital
5
5
10
Reserves& Surplus
61
60
72
Shareholders’ Funds
66
64
82
Minority Interest
-
-
-
Total Loans
3
9
8
Other Liabilities
2
2
2
Total Liabilities
71
76
92
APPLICATION OF FUNDS
Net Block
5
11
14
Investment Property
-
27
2
Capital Work-in-Progress
1
0
-
Investments
-
-
-
Current Assets
116
62
128
Inventories
-
-
-
Sundry Debtors
69
40
91
Cash
32
10
15
Loans & Advances
-
-
-
Other Assets
16
12
23
Current liabilities
67
47
77
Net Current Assets
50
15
51
Deferred Tax Liabilities (net)
2
1
1
Other Assets
13
21
24
Total Assets
71
76
92
Source: Company, Angel Research
Dreamfolks Services Limited | IPO Note
August 23, 2022
6
Cashflow Statement (Consolidated)
Y/E March (₹ cr)
FY’20
FY’21
FY’22
Profit before tax
44
0
20
Depreciation
2
2
2
Change in Working Capital
(7)
5
-29
Interest / Dividend (Net)
0
-2
0
Direct taxes paid
(16)
2
-8
Others
(0)
0
1
Cash Flow from Operations
22
6
-12
(Inc.)/ Dec. in Fixed Assets
(7)
-36
-7
(Inc.)/ Dec. in Investments
0
9
27
Interest Received
7
0
-13
Cash Flow from Investing
0
-27
6
Proceeds / (Repayment) of borrowings
1
-1
-1
Proceeds / (repayment) of Other Financial liabilities
0
0
-1
Interest paid
(0)
0
-1
Cash Flow from Financing
1
-2
-3
Inc./(Dec.) in Cash
23
-22
-9
Opening Cash balances
9
32
10
Closing Cash balances
32
10
1
Source: Company, Angel Research
Key Ratios
Y/E March (₹ cr)
FY'20
FY'21
FY’22
Valuation Ratio (x)
P/E (on FDEPS)
53.8
(1,174.7)
104.8
P/CEPS
51.2
16,378.4
92.7
P/BV
26.0
26.5
20.7
EV/Sales
4.6
16.1
6.0
Per Share Data (Rs)
EPS (Basic)
6.1
-0.3
3.1
EPS (fully diluted)
6.1
(0.3)
3.1
Cash EPS
6.4
0.0
3.5
Book Value
12.5
12.3
15.7
Returns (%)
ROE
48.4
(2.3)
19.8
ROCE
63.4
(2.6)
22.6
Source: Company, Angel Research;
Dreamfolks Services Limited | IPO Note
August 23, 2022
7
Research Team Tel: 022 - 40003600 E-mail: [email protected] Website: www.angelone.in
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