Dreamfolks stock tanks 28% post Q1 results

Shares of Dreamfolks Services tumbled 15% in intraday trade on Thursday, taking the stock's two-day fall to 28% after the company reported its first-quarter results.

The counter has slumped 28% from the pre-earnings level of ₹786.75 to ₹560.05 on the BSE, taking the airport lounge operator's market cap to under ₹3,000 crore.

Dreamfolks Services' net profit stood at ₹13 crore during the first quarter compared with a net profit of ₹13.4 crore in the corresponding quarter last year.

The company's earnings before interest, taxes, depreciation, and amortisation (EBITDA) fell 3.6% year-on-year to ₹18.69 crore, dragged down by higher operational costs, including the cost of services and employee costs. EBITDA margin contracted by 500 basis points to 7% in the June quarter from 12.1% in the year-ago period.

Revenue of the airport services aggregator rose 66% year-on-year to ₹266 crore in the first quarter as against ₹160.5 crore in the corresponding period of the preceding fiscal.

The board of DreamFolks approved a dividend of ₹0.5 per share for the quarter ended June. This dividend will be payable on or before September 8, 2023 to the shareholders on the record date as of August 22, 2023.

The domestic air traffic for the quarter has increased by 18.63% in comparison to the same period in the previous fiscal year. Despite Q1 being a typically subdued period, the company has seen a robust 45.30% year-on-year growth in passengers utilising their lounge and other services in Q1 FY24.

“It has been an impressive beginning to the year, building upon the positive trends of the previous two quarters. DreamFolks has showcased strong operational capabilities, resulting in a significant revenue uptick,” says Liberatha Kallat, chairperson and managing director, DreamFolks.

“Our steadfast commitment to an asset-light model and lean team structure has allowed us to proudly maintain a debt-free status,” Kallat says.

DreamFolks Services made its debut on the domestic bourses in September 2022. The stock listed at a premium of 56% as investors piled into the IPO of the airport service aggregator. The company provides an in-house proprietary technology platform that allows its clients such as banks, card networks, airlines, online travel agencies (OTAs) and enterprises to create custom offerings for their end consumers.

DreamFolks today manages the lounge and other benefits for most of the top banks including the top 5 credit card issuers in India and enjoys a market share of over 90% in the domestic lounge access market for India-issued debit and credit programmes.

India’s air passenger traffic is expected to continue on a recovery course and clock double-digit growth in FY24, riding on a pick-up in international and business travel, capacity expansion by airport operators, and higher availability of aircrafts, according to CRISIL ratings. Air traffic volume is expected to rise further to over 380 million in FY24, which translates to a healthy growth of 17% over FY23, predicts the ratings agency.