Hello Sir,

Hope you are doing well.

I am sure you must have accessed Airport Lounge. If not, you must have seen a large queue of people waiting to enter airport lounges.

Most of the time, company facilitating airport lounge access is none other than Dreamfolks Services.

Dreamfolks is the market leader in the airport lounge aggregation industry in India and facilitates access to airport related services like – lounges, food and beverages, spa and wellness, etc.

After surging to 800 odd levels, the stock is down 50% to around 400 odd levels now. Can it be a good contra bet?

Below, we have shared points from the Q2 FY 25 concall of the company to understand management’s views regarding the outlook for the business.

 

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Dreamfolks Services – Points from Q2 FY 25 concall

– Strategic Initiatives:

  • Diversification and expansion remain core strategies, including a broader range of services, a wider client base, and greater geographical reach
  • The company has expanded beyond airport lounges, introducing highway dining services at over 600 establishments
  • Excess baggage services have been added to the service portfolio
  • Golf services are expanding, with new golf academies and courses being added
  • Meet & Assist services have been enhanced with new touch points in Africa

– Client Base Expansion:

  • Dreamfolks has onboarded seven new enterprise clients across various sectors
  • New partnerships include Akasa Air, Amazon, and Countrywide Networks

– Lounge Network:

  • Dreamfolks has maintained 100% coverage at all Indian airports
  • The international lounge network has expanded by 38 lounges, primarily in Asia

– Technology:

  • Dreamfolks utilizes a proprietary, cloud-based platform for seamless access to airport services
  • The technology allows for customized products for banking partners and real-time benefit verification for lounge operators

– Spend-Based Programs and Revenue Growth:

  • The implementation of spend-based programs by banks is ongoing and is affecting lounge access
  • Some banks are increasing spend limits for lounge access, which was not anticipated by the company
  • Due to these changes, it is difficult to forecast revenue growth and the company may not be able to meet previous projections of 20% CAGR

– Other Important Points:

  • Revenue from non-lounge segments is currently about 6.7% of the total, with a goal to increase this to 20% in the next 4-5 years
  • Increased employee expenses are due to hiring across regions as part of the expansion strategy, with a target of increasing staff by 12-20%
  • An increase in trade receivables is due to the implementation of spend-based programs and delays in client payments
  • While passenger numbers and credit card usage are growing, the number of passengers accessing lounges has decelerated, primarily due to spend-based programs implemented by banks

(End)

 

Disclaimer: This is not a recommendation to buy/sell Dreamfolks Services. The securities quoted are for illustration only and are not recommendatory.

 

Best Regards,

Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.com/

 

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