Dreamfolks hits new low, falls 35% from listing price on Covid-19 fears

Shares Dreamfolks Services declined 2 per cent to hit a new low of Rs 358.80 in Monday’s intra-day trade, in an otherwise firm market. The stock of airport & airport services company traded at its lowest level after market debut on September 6.

In the past four trading days, the stock fell 14 per cent amid rising Covid-19 cases in China. With Monday’s decline, the stock corrected 35 per cent from its listing day high value of Rs 550. At 11:27 AM; it traded flat at Rs 367.10, as against 0.97 per cent rise in the S&P BSE Sensex. Currently, the stock traded 12 per cent higher over its initial public offer (IPO) issue price of Rs 326 per share.

DreamFolks is a dominant player and India’s largest airport service aggregator platform with a unique, asset light, and capital efficient business model.

DreamFolks’ provides services to all the card networks which operates in India including Visa, MasterCard, Diners/Discover and RuPay. Among many of India’s prominent card issuers, ICICI Bank, Axis Bank, Kotak Mahindra Bank, HDFC Bank and SBI Cards are attached to the company. It has been an asset-light business model gaining preference of air travelers.

Meanwhile, on December 21, Crisil Ratings upgraded its rating on the long-term bank facility of Dreamfolks to ‘CRISIL BBB/Positive’ from ‘CRISIL BBB-/Stable’.

The upgrade reflects the improved business risk profile on the back of healthy recovery in operating income and operating margin in fiscal 2022. Moreover, in the current fiscal, the company achieved revenue of Rs 331.5 crore during H1-FY23 and is expected to clock revenue of around Rs 600 crore for fiscal 2023.

The healthy growth in revenue, analysts said, would be supported by increased air travel post Covid-19, addition of customers and lounges over the years as well as increased customer awareness for availing airport lounge facilities.

“The rating reflects Dreamfolks’ established position in providing lounge services, backed by healthy relationships with clients and lounge partners, healthy financial risk profile and healthy liquidity profile. These strengths are partially offset by risk to timely renewal of contracts with lounge partners and clients, and client concentration risk,” the ratings agency said.

With the top five clients contributing to 80-85 per cent of total revenue, analysts believe that the revenue and profitability remain dependent on growth plans of the clients. Therefore, DreamFolks endeavors to enhance the customer loyalty experience run by its clients.