Dreamfolks IPO Review and Analysis – Is the IPO overpriced?

Gurugram based Dreamfolks Services is coming up with an IPO, which would open for subscription on 24th August, 2022. Dreamfolks Services is India’s largest airport service aggregator platform. It provides services to all card networks operating in India including Visa, Mastercard, Rupaycard etc. Should you invest in Dreamfolks IPO? What are the risk factors in this IPO? In this article we would provide Dreamfolks IPO Review with detailed analysis.

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About Dreamfolks Services Limited

Company is a dominant player and India’s largest airport service aggregator platform facilitating an enhanced airport experience to passengers leveraging a technology driven platform.

Dreamfolks Services Review and AnalysisIts asset-light business model integrates global card networks operating in India, credit card and debit card issuers (Card Issuers) and other corporate clients, in India, including airline companies (Corporate Clients and along with Card Networks and Card Issuers, the Clients) with various airport lounge operators and other airport related service providers (collectively, the Operators) on a unified technology platform.

Company facilitates customers of Clients’ (Consumers) access to the following airport related services

(i) lounges

(ii) food and beverage

(iii) spa

(iv) meet and assist

(v), airport transfer

(vi) transit hotels / nap room access and

vii) baggage transfer

Its dominance is underpinned by facilitating access to 100% of the 54 lounges currently operational in India, and they also enjoyed a market share of over 95% of all India issued credit card and debit card (Card Based) access to airport lounges in 2022. Additionally, in Fiscal 2022 they also accounted for around 68% of the overall lounge access volume in India. Further, as at March 31, 2022 through their partnerships with other service providers, they have a global footprint extending to 1,416 Touch-points in 121 countries across the world out of which, 244 Touch-points are present in India and 1,172 Touch-points overseas.

Dreamfolks IPO – Dates, issue details, Size and Price Band

IPO Opening Date 24-Aug-22
IPO Closing Date 26-Aug-22
Issue Type Book Built Issue IPO
Face Value Rs 2 per equity share
IPO Price band Rs 308 to Rs 326 per equity share
Lot Size 46 Shares
Min Order Quantity 46 Shares
Listing at BSE and NSE
Total Issue Size (Entire OFS) Rs. 562.1 Crores

Dreamfolks IPO RHP

What are the competitive strengths of Dreamfolks Services Ltd?

1) Company is a dominant player in the airport lounge aggregation industry in India with strong tailwinds

2) It has entrenched relationships with marquee Clients including global card network providers in India and prominent Indian and global banks and corporates

3) It has a strong business moat due to the flywheel effect led by Clients and Operator’s network

4) Company has ability to capitalize on growing Consumer base with no associated costs of direct Consumer acquisition

5) It has asset and human resource light business model with a strong track record of delivering consistent growth

6) It has a proprietary technology platform that ensures scalability

What are the Objects of the IPO Offer?

Dreamfolks IPO Size is Rs 562.1 Crores which is entirely Offer for Sale (OFS).

Under OFS, selling shareholders would sell the shares and the company would not get any proceeds from this.

Who are the promoters of Dreamfolks Services Ltd?

Liberatha Peter Kallat, Mukesh Yadav and Dinesh Nagpal are the promoters of the company.

How is the company financial track record?

Here are the total assets, revenues and profits of the company in the last 3 years.

Financial Year ending / Period ending (Amt in Crores)
Particulars FY20 FY21 FY22
Total Assets 137.8 122.5 168.7
Revenues 367.8 108.1 284.0
Profit After Tax 31.7 -1.5 16.3
Profit % 8.61% -1.34% 5.72%

Positive Factors in Dreamfolks IPO

Here are the key reasons to invest in this IPO.

1) Dreamfolks IPO is a dominant player in the airport lounge aggregation industry in India.

2) Company has a strong business moat due to the flywheel effect led by clients and operator network.

Risk Factors of investing in Dreamfolks IPO

1) Company revenues are on declining mode in the last 3 years. Its revenues dropped from Rs 367.8 Crores in FY20 to Rs 284 Crores in FY22.

2) Company margins are on declining mode. Its margins were at Rs 31.7 Crores for FY20 (which is 8.6% of revenue) Vs Rs 16.3 Crores in FY22 (which is 5.7% of revenue).

3) Objects of the offer is entirely Offer for Sale (OFS). The proceeds would go to selling shareholders and company would not benefit from this.

4) Company success is dependent on its long term relationship with card networks and card issuer financial institutions which on average is 98.98% of its total revenue in the last 5 years. It exposes to risk emanating from the inability to retain its established card networks and car issuer companies as clients.

5) Company success also dependent on its relationship with airport lounge operators which on average is 98.5% of total revenue in last 3 years. Even this exposes risk to the company.

6) Company operations are heavily dependent on the travel industry. Any down trend in this industry can pose high risk to the business.

7) Covid-19 has material impact on the travel industry and company business too. Such pandemics are uncertain and can affect in future too.

8) Investors should read complete risk factors indicated in the RHP before investing in this IPO.

Dreamfolks IPO valuation

Is the Dreamfolks IPO share price over priced ? Let us check this aspect.

Dreamfolks IPO price band is Rs 308 to 326 per share.

1) If we consider last 3 years weighted average EPS of Rs 3.98 and the upper price band of Rs 326, P/E works out to 82x.

2) Similarly, if we consider FY2022 EPS of Rs 2.98 and the upper price band of Rs 326, P/E works out to be 109x.

3) Means company is asking the upper band of IPO price of Rs 326 in the P/E ratio of 82x to 109x.

As per the RHP, there are no listed peers, hence we cannot ascertain whether the issue price is under priced or overpriced. However, considering P/E of over 80x we can definitely say that Dreamfolks IPO price is overpriced.

Dreamfolks IPO Dates – Subscription, Allotment and Listing Dates

Offer Open 24-Aug-22
Offer close 26-Aug-22
Finalization of Allotment 01-Sep-22
Initiation of Refunds 02-Sep-22
Credit to Demat Account 05-Sep-22
IPO Shares Listing Date 06-Sep-22

How to buy Dreamfolks IPO online through Zerodha?

You can login to your demat account, visit the IPO section and apply for this IPO during the subscription dates.

You can also apply this IPO on Zerodha. If you do not have Zerodha account, sign-up here and proceed to the next step.

Zerodha customers can apply in this IPO by login into Zerodha Console submitting an IPO application form.

Follow below steps to apply this IPO in Zerodha platform:

1) Visit the Zerodha portal and login to the console.

2) Go to Portfolio and click the IPOs link.

3) Visit ‘Dreamfolks Services Ltd IPO’ row and click the ‘Bid’ button.

4) Enter your UPI ID, Qty and the Price which you want to bid.

5) Click on ‘Submit’ IPO application form.

6) Visit the UPI App (net banking or BHIM) to approve the mandate.

What is Dreamfolks Services IPO GMP today?

Dreamfolks IPO gmp ipowatch – Rs 80 per share

Dreamfolks IPO Chanakya GMP –Rs 70 per share

Dreamfolks IPO GMP IPO Central – Rs 60 per share

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Dreamfolks IPO Review – Should you Invest or not?

Dreamfolks Services Limited is India’s dominant player in the airport lounge aggregation industry.

Company revenues have dropped in the last 3 years.

Even the margins are on declining mode. In fact, it declared losses in FY21, however we can attribute this to covid-19 pandemic as the entire travel industry got affected.

Its issue price is overpriced.

Considering all these positive factors and negative factors indicated above, investors can avoid this IPO as of now. While company has moat business, investors should think whether they need to invest in a company where the revenues and margins are falling and where the issue price is over priced.

Dreamsfolks Sercies IPO – FAQs

What are Dreamfolks services ipo dates?

The IPO would open for subscription on 24th August, 2022 and closes on 26th August, 2022.

What is Dreamfolks IPO Price?

The IPO Price band is Rs 306 to Rs 326 per share.

What is Dreamsfolks IPO Lot Size?

The IPO Lot size is 46 shares and in multiple of 46 shares each.

What is Dreamfolks ipo grey market premium (GMP) today?

While the shares are not actively trading, the GMP is between Rs 60 to Rs 80 per share based on various experts who are tracking this.

Is it good or bad to invest in Dreamsfolks Services IPO?

Company revenues and profits are on declining mode in the last 3 years. Its issue price is also overpriced. It is better to avoid such companies as of now.

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Suresh KP

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