DreamFolks Services IPO has opened today for subscription and the company has already allotted 77,59,066 equity shares to 18 anchor investors and raised INR252.94 crore. These shares were placed at the upper end of the price band of INR326 per share. Meanwhile, brokerage houses have also come out with their recommendations. Here is IPO Central’s compilation of DreamFolks IPO reviews by prominent brokers.
The company is India’s largest airport service aggregator platform facilitating an enhanced airport experience to passengers leveraging a technology driven platform. DreamFolks Services has 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.
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DreamFolks IPO Review: Analysts Mostly Positive
While highlighting the IPO’s high valuation, Angel One analyst Purves S Chaudhari has recommended investors to invest in the IPO. “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 longterm perspective,” said the brokerage house’s report on DreamFolks IPO analysis.
DreamFolks Services has major presence in airport related services such as Lounge, Food & beverages, Spa, pick up and drop service amongst others. It has a 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.
GEPL Capital feels that the industry is likely to see much better days going forward. “There are no directly comparable metrics to evaluate Company. However, Air Travel is underpenetrated as compare to road. In the Long run, the company to benefit from Higher no of ports planned by Central Govt. The company commands better Return ratios due asset light nature of operations,” analyst Harshad D. Gadekar mentioned while assigning “SUBSCRIBE FOR LONG TERM” rating to the IPO.
Another positive DreamFolks IPO review came from KR Choksey which finds the IPO a play on travel recovery. “As the air travel industry recovers sharply from the Covid-19 uncertainties, we are optimistic the company is well-poised for the upcoming growth opportunities owing to its market dominance. The company has also been expanding its presence in the international air lounge market by improving its touchpoints. We believe it is significant for the company to grow in the domestic and international lounge services by expanding its partnerships with card issuers and other service providers. As a result, we recommend that DreamFolks Services Ltd IPO be rated SUBSCRIBE,” said its IPO note.
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DreamFolks IPO Review: Some are cautious
Nevertheless, analysts see some concerns as well with the company’s business model. High dependency on the travel and airline industry, limited number of clients and uneven profitability are among the major concerns analysts have highlighted.
With easing travel restrictions, Ventura Securities expects the company’s revenue and profitability to recover to the pre-pandemic period levels of FY2020. However, in DreamFolks IPO review, the brokerage house has a Neutral rating. “At the IPO price of INR 326 (upper price band), Dreamfolks’ is valued at FY22 P/E of 104.8X. Dreamfolks is expected to benefit from its leading position and the upcoming growth opportunities in the aviation sector, however, we would like to monitor the operating performance post listing to gain confidence. We recommend a NEUTRAL rating on the stock.”
Canara Bank Securities has recommended investors to steer clear of the IPO on overvaluation concerns. “The company is entering into the railway lounge services, which would give more business diversification and better growth visibility in the near future. The company’s Debt / Equity ratio stands at 0.02x as on FY22. However, the issue is priced at PE of 109.4x to its FY22 earnings, which seems to be overvalued. Thus, we recommend to Avoid the issue,” said the broker’s DreamFolks IPO analysis.
As one can see, DreamFolks IPO reviews are largely positive and reflect the general consensus about better days ahead for the travel and airline industries which should translate into higher revenues and profits for the company. In the grey market too, the IPO is popular and trading in the positive territory. Current IPO GMP is INR70 which translates to a premium of 21.5%.
