Dreamfolks services limited( DFS)

Basis my analysis, I don’t find anything wrong in the business fundamentals of this company. This business is certainly a volume game - higher the sales higher is the accrual to the bottom line.

If one considers the three main stakeholders of the business/ecosystem, it is the lounge operators who incur the maximum expenditure in terms of capex. For this ecosystem to survive and make meaningful gains for all parties, some amount of flexibility/cooperation shown by the player with the least capex is actually good in the long run. The current price level gives good opportunity to make an entry.

P.S. This is not a buy/sell recommendation but my opinion on the company/business.


Dreamfolks (monopoly bridge between lounges and card issuing banks in India) Q1 updates -

Have signed a new agreement with Plaza premium in Q1 to expand global Lounge coverage. Provides Airport lounge access across 04 continent, operates 340 + lounges @ 70 major Intl airports

Q1 Financial Outcomes -

Sales- 266 vs 160 cr
Gross Profit- 28 vs 25 cr
EBITDA- 18 vs 19 cr ( margins @ 7 vs 12 pc )
PAT- 13 vs 13 cr ( largely flat )

Domestic : International revenue mix- 74:26

Cash on books- 83 cr

Current Mkt share in card based lounge access in India- 95 pc

Number of touch points across the Globe - 1700

Countries covered- 100+

Domestic air passenger traffic in Q1 @ 3.8 cr vs 3.2 cr YoY. India expected to be 3rd largest aviation Mkt by 2024. Current numb of airports @ 140

Dreamfolks foot fall in Q1 @ 26 lakh vs 18 lakh YoY

Number of airports to grow to 220 by 2026

Four major airports expected to come online in near future- Noida, Navi Mumbai, Lucknow, Ayodhya

No of credit cards in India were 2.9 cr in 2017. In Apr 23, this number was 8.5 cr. Expected to surpass 10 cr credit card mark by end 2024

Currently only about 35 pc of Indian credit cards have the facility of Lounge access. Here again, there is scope for growth

Current number of lounges at Indian Airports @ 58 with an area of 4 lakh sq ft. These are facing excessive demand & efforts are on to set up more lounges

Dreamfolks have 100 pc coverage of Railway lounges. Another growth area as railway Infrastructure develops

Company expanding into providing access to Restaurants, Golf Courses, Spas etc by expanding the tie up with banks for high end cards

Sharp drop in margins in Q1 due -

(a) More investments in human capital

(b) Lag in price hikes for lounge operators by Airport operator vs price increases by the Banks. Hence Q1 typically is likely to see this anomaly

(c) One time 3 X hike common areas maint charges by by Airport Operators- unlikely to recur

Points (b) and (c) adversely affected lounge operators in turn putting pressure on company’s margins

Company revising its Gross Margins guidance lower to 11-13 pc band from 14-15 pc

Have given out ESOP benefits to all the company employees to align company-employee goals

Company guiding for 60-65 pc top line growth for FY24

Margins from other services (except lounge-like Golf, Spa’s etc) are likely to be much higher but their base is too small at the moment

Presently, there r 12 railway lounges in India and company has 100 pc coverage with them

With increased Govt spending on Railways, this can also be huge growth area in Future

Have started offering differentiated services to differentiated card holders. Eg - Premium card holder may get preferential luggage transfer, better/more facilities at the lounge etc

My take-

Key monitor able is how the company is able to (or not) maintain its margins from FY 25 onwards (after a sharp fall in FY 24)

If they can do it, it can be a very good business

Basically, one has to keep a sharp look out on margin trajectory and take a call accordingly

Disc: not invested. May invest if company is able to hold onto / improve gross margins


9 crore related party transaction for the period from 01/10/2022 to 31/03/2023. And similarly 16480543 cr transaction for the period 01/04/2022 and 30/09/2022.

Highly appreciate experts’ views on this.
Is this normal or consider to be negative aspect?