Dreamfolks IPO Review 2022 – GMP, Strengths & Weaknesses

DreamFolk IPO Overview

Dreamfolks IPO Review

Dreamfolks Services Ltd is coming up with its IPO, and it will open for subscription on August 24th, 2022, and close on August 26th, 2022, while it is looking to raise Rs 562.10 Cr whole of which will be an offer for sale.

About The Company

It acts as a service provider between the lounge operators on one side, and banks, card networks, airlines, and corporates on the other end, and the company also leverages technology and offers the solution through Omni channels such as App-based access, tracking live benefits on each card, whereas it covers most of the banks in India, it covers India’s largest private and public sector card issuing companies such as HDFC Bank Limited, SBI Cards, Payment Services Limited, and ICICI Bank Limited, while the company is a key player in the market of India & currently accounts for more than 80%, of the total lounge traffic in major cities like Bangalore, Mumbai, Cochin, and Ahmedabad to name a few.

Other services of the company include:

  • Meet and Assist
  • Transit Hotels / Nap Rooms
  • Food and Beverages
  • Airport Transfers
  • Spa
  • Door-step Baggage Services

The airport lounges have grown steadily in India over the past 5 years, and the Indian Airports average around 2 lounges per airport, while the Indian lounge market is expected to grow at four times the current market size and is expected to reach 204 lounges by 2040, whereas Indian domestic air travel passenger is expected to grow at a CAGR of around 36% and surpass 280 million between 2021-2025, and the international Indian air travel market is expected to almost grow at 31% CAGR between 2021-2025. 

The credit card market grew from 33 million outstanding cards on Sept 17 to around 65 million outstanding cards on Sept 21 at a CAGR of 18.17%, and the number of outstanding credit cards on Dec 21 was 68 million while the number of debit cards issued was 937 M.

Strengths of the Company

  • It is a dominant player that has 100% lounge coverage in India with significant exclusivity for India-issued credit and debit card programs in key locations.
  • It accounts for almost 95%-97% of the India-issued debit and credit card-based access to the airport lounges for FY20.
  • Has a strong and long-standing relationship with well-known clients including global card network providers in India and prominent Indian and global banks and corporates.
  • The company has a growing customer base with zero direct cost for acquiring them.
  • The company has its proprietary technology platform that ensures the scalability of the business.

Weaknesses of the Company

  • A large portion of their revenue comes from a single source which is card issuer financial institutions.
  • The business is heavily dependent on the air travel industry, and any event like covid can harm their operations.
  • Their business also relies on the Cards that are around with normally any person and on the issuance of new credit and debit cards.
  • The company is potentially near to being plateaued in Indian markets and is required to expand into the global markets for growth.
  • The company is technology driven and is in danger of cyber-attacks.

Dreamfolks IPO Review – Grey Market Information

The shares of Dreamfolks traded at a premium of 24.54% in the grey market on August 22nd, and the shares tarded at Rs 406, which gives it a premium of Rs 80/ share over the cap price of Rs 326.

Dreamfolks IPO Review – Key IPO Information

Backed by: Liberatha Peter Kallat, Mukesh Yadav, and Dinesh Nagpal

Book Running Lead Managers: Equirus Capital Private LTD and Motilal Oswal Investment Advisors LTD

Registrar To The Offer: Link Intime India Private LTD

The Objective of the Issue

The company will not be directly receiving any proceeds from the Offer and the entire Offer Proceeds will be received by the Selling Shareholders and in proportion to the Offered Shares sold by the particular Selling Shareholders as part of the Offer.

Conclusion

In this article, we looked at the details of Dreamfolks IPO Review 2022, analysts remain divided on the IPO and its potential gains, while this is a good opportunity for the investors to look into the company & analyze its strengths & weaknesses.

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