Majority of the brokerage have suggested subscribing to the issue ahead of the Rs 562 crore initial public offering (IPO), which will open for subscription on August 24 and run till Friday, August 26. However, some remain neutral over the issue.
The IPO of DreamFolks Service, an airport service aggregator platform, will be sold in the price range of Rs 308-326 apiece. The IPO is entirely an offer for sale (OFS) of up to 1,72,42,368 equity shares with a face value of Rs 2 each.
In terms of the valuations, the post issue P/E works out to 104.8x FY22, EPS at the upper range of the price band, However, it looks higher mainly due to lower profitability caused by pandemic led industry wide issue, said Puves S Chaudhari from Angel One.
The company enjoys 95 per cent market shares and has an asset light mode, gaining the preference of air travellers. The company has focused on diversifying and increasing services portfolio, it added with a subscribe rating to issue in medium to long run.
Dreamfolks has coverage across 54 lounges across domestic and international airport terminals in Bangalore, Mumbai, Cochin, Ahmedabad and more.
The company’s service covers the entire journey of passengers from door-step to the airport, within the airport, and again from the airport to the door-step at the destination.
It provides services which include lounge access, food & beverages, spa services, airport transfers, baggage transfers, medical and hotel services.
Nirvi Asha from
Broking, which remains neutral on the issue, said that in the last 3 years, the company’s financials have not been consistent as it got impacted by the pandemic in FY21. Revenue and PAT has seen a rise between FY20-22.
High dependency on the travel industry, limited clients and revenue from lounge access forms a major portion of revenue are the key concerns for the brokerage.
The retail portion is pegged at only 10 per cent of the net offer, whereas qualified institutional buyers will get 75 per cent shares in the offer. Remaining 15 per cent allocation will be alloted to the non-institutional investors.
Another brokerage firm Jainam Broking has recommended subscribing to the issue as it sees that the company is profitable with no debts and the travel industry is facing tailwinds post pandemic.
“The company has no private equity. It is a Platform based asset light business model and has first mover advantage as there are no such companies in India its peers are only present in China and UK,” it added.
Equirus Capital and
Investment Advisors are the book-running lead managers for the offer, whereas Link Intime India is the registrar to the issue. Shares of the company will be listed at both BSE and NSE.
Aayush Agrawal, Senior Research Analyst,
said that despite the asset-light operations, the company has witnessed volatile cash flows due to high receivables.
The issue is OFS which will lead to a 33 per cent dilution of the promoter’s stake and premium valuations makes it suitable for long-term investors with moderate to high-risk appetite, recommending to subscribe to the issue only for high risk investors.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)