Motilal Oswal Focused Fund bought 461912 shares of Dream in the month of Oct 2023…
Moderator may delete this post if thinks it doesn’t add any value…
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I am quite surprised that Dreamfolks has not yet suggested a Rs 50 convenience fee in the structure. Since the differential of Rs 2 and Rs 300-500 for food is huge, people will still pay. Banks can still call it free. This will address the margin which Dreamfolks has lost.
Disclosure - Invested and optimistic of growth since the potential due to new lounges, new airport, stations is huge.
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Dreamfolks removed from the MSCI Global SmallCap Index
Stock up 8%.
Divergence on its peak.
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https:www.bseindia.com:xml-data:corpfiling:AttachLive:58b18183-a1d6-4b21-aaa5-0dba288f9645.pdf (573.6 KB)
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Hey @Ascendant
This is just because of the increase in market cap right as stock price is increased.
Can we infer some insights from it?Positive or Negative sentiment
Pls let me know just to clear my doubt
Addition of the company to MSCI index was decided on 10th August. Since then the stock price is still the same, so it is not due to that.
I see it as highly negative news, since there are going to be outflows from December 1 onwards.
Disclaimer: Invested, due to FOMO of growth in Airport lounges/Credit cards/Premium Services
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Dreamfolks partners with Grey Wall (Russia):-
In my opinion Growth will come from the uptick in the conversion rate of passengers, which is around 7.3% in Q2 and It was 6.2% in Q4FY23. They supposed to close some international deals, which will boost the growth at an exponential rate as it will add pax.
Over all on bearish case i am confident about their 20-30% growth, margins may improve slowly on QoQ basis as volumes increase.
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I think this Quarter numbers will show whether any effect of this policy changes are reflecting on the numbers or not
I partially agree with your view but now a days every one has multiple credit cards, if HDFC pull back this lounge access program then people will use other bank cards. On the other hand, so many debit cards also has lounge access program with AMC of ~500.
Even though management is also cautious about the immediate growth, i feel that there won’t be any much impact on pax numbers going forward.
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Motilal Oswal Focused Fund added Dreamfolks in the month of Nov.23…from 461912 at the end of Oct.23
to 721699 at the end of Nov. 23…
Discl. having tracking position… keenly watching.
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I couldn’t quite clearly understand the first layer that the management is talking about.
Banks basically use this as a way to administer the benefits that have been given to the end consumers.
^ Agreed.
Still the question is does bank really need their platform? Cannot bank get this information when the card is swiped at a lounge/golf/spa ? Or may be Dreamfolks have something to do with card swipe machines which are used?
and this is the main platform on which all the usage, the spend, and everything is getting tracked
banks are using this technology to also drive a lot of their spend based models
and the usage-based models.
^Didn’t get this part.Doesn’t banks already have customer spend information. What spends are they talking about ?
And they spent 5.5 crore to develop it. The cost seems high for a simple software to manage logins.
And any other company who wants to build such tech can easily build it very quickly and at low cost.
To me it seems like there is no big moat in the business. Its just that there is very less competition in the space right now.
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ICICI Bank updated the terms for availing Lounge facility
- We are updating the criteria to avail Complimentary Domestic Lounge Access Offer on your Credit Card. Starting Apr 1, 2024 , you can enjoy One Complimentary Airport Lounge Access by spending 35,000 in the preceding calendar quarter. Spends made in the preceding calendar quarter will unlock access for the subsequent calendar quarter. To be eligible for Complimentary Lounge Access in Apr-May-Jun, 2024 quarter, you need to spend a minimum of 35,000 in the Jan-Feb-Mar, 2024 quarter and similarly for following quarters.*
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35k spending criteria is too much. HDFC has 5k spending criteria to give lounge access in the next quarter, this is quite easy for normal spenders also.
This spend based lounge access impacts we may see in Q4 numbers directly, management cautious statement is well appreciated.
I thought impact would be minimal but it seems that there could be some big dip in footfall going forwards for few quarters
Dreamfolks entry level card does offer Airport Lounge Access. One of my relative recently got it.
I think if Credit card companies keep doing it, revenues will get affected until people switch to the DFS card.
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I think for dreamfolks the metric to track is growth of airport lounges, in terms of sq feet and also number of lounges, the devaluation of credit card reward was bound to happen, this kind of business is much more stable for everyone. I think I will rule out the possibility of a competitor getting in this business as GM should be stable around 10% atleast.
I wanted to understand how much banks are paying for lounge access, if on an average it costs around Rs 200-300 it can be sustainable with every year 5-8% escalation.
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Dream folks commission per pax is 100-150/-.
Bank cost per domestic visit lounge is ~700-, for international lounge it would be ~1100-1200.
if it costs only 200-300/- for banks then i think banks won’t bother much about it as they can recover these expenses through MDR charges.
I think we may see significant drop in numbers of DFS due to sharp fall in pax numbers
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TAR wrote an amazing article on DreamFolks - I urge everyone to read that article to understand the weakness in the business model.
- The biggest risk is that the company doesn’t have any bargaining power - either with it’s suppliers (airport lounge operators) OR with it’s buyers (banks / CC issuers / telecom operators)
- The IP looks quite simple to replicate. They don’t have a lot of backend engineers to manage the ‘technology platform’. What stops other bigger players (Priority Pass) to build this?
- It already has a market share of 95% in the card based lounge access market. So, the only room to grow is MORE PASSENGER TRAFFIC. International markets are not that easy to capture.
Positives that I am seeing right now:
- It is trying to add new business streams (Visa services, E-SIM, Golf services)
- Collaborated with Plaza Premium Group to include >340 lounges in its network
New streams will take time to contribute to the topline + this partnership with Plaza - I’m not really sure how much benefit they will derive from it because they haven’t partnered with foreign banks / card issuers. So only if you use a domestic card in an international lounge, will it benefit DreamFolks (as per my understanding).
Disclosure: Small position in the stock, comtemplating to sell if the stock zooms further
Wrote a detailed article on this topic - DreamFolks Services : A play on lounges
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I think growth will come from opening of new lounges and as the existing lounges are already crowded.