Up to 28% upside potential! Here's why Motilal Oswal is bullish on Dreamfolks Services
Motilal Oswal, in its recent report, initiated its coverage on the smallcap stock with a 'Buy' rating at a target price of Rs 650, implying around 28 per cent potential upside.
- Feb 28, 2024,
- Updated Feb 28, 2024 7:52 PM IST
Shares of Dreamfolks Services have recovered 28 per cent from their 52-week low of Rs 397. However, the stock is still trading 40 per cent lower from its 52-week high of Rs 846.75.
Motilal Oswal, in its recent report, initiated its coverage on the smallcap stock with a 'Buy' rating at a target price of Rs 650, implying around 28 per cent potential upside. It expects the company to benefit from the rapid growth in the Indian airline industry, driven by competitive fares, rising leisure travel, new airports, and government push.
"Further, the increasing adoption of bank cards (with lounge access as a key benefit) is boosting the pay-per-use revenue model of Dreamfolks. This should help it deliver a strong 20 per cent revenue/28 per cent PAT CAGR over FY24E-26, despite a high base, near-term setbacks due to revised airport charges, and a shift to the spending-based model. We see venturing into international markets as a lucrative long-term opportunity carrying significant potential value," it said.
The brokerage firm sees a significant option value from the nascent expansion into international markets and diversifying into other sectors. This can significantly enhance the value of the business through an expansion of an addressable customer base.
"Given the company's dominant position in the airport lounge access market, it has been successful in building a bridge between its clients and airport lounge operators. Its position in the industry enables it to create interdependencies for its service offerings, enabling it to attract newer clients and operators, which help it to further strengthen its position in the market," it added.
Going forward, Motilal Oswal sees a possibility of gross margins improving from current levels. It expects Dreamfolks' gross margin to bottom out in FY24 at 12.2 per cent and recover to 13 per cent in FY25.
About the company
DreamFolks (DFS), an airport services aggregator and tech platform, connects lounges and premium airport facilities with users of bank credit/debit cards.
The company holds a 75 per cent volume market share in domestic airport lounges and it is the only player with 100 per cent coverage of airport lounges.
It is also the go-to partner for banks seeking to provide complimentary access to paid airport services lounge.
Disclaimer: Business Today provides stock market news for informational purposes only and that should not be construed as investment advice. Readers are encouraged to consult a qualified financial advisor before making investment decisions.
Shares of Dreamfolks Services have recovered 28 per cent from their 52-week low of Rs 397. However, the stock is still trading 40 per cent lower from its 52-week high of Rs 846.75.
Motilal Oswal, in its recent report, initiated its coverage on the smallcap stock with a 'Buy' rating at a target price of Rs 650, implying around 28 per cent potential upside. It expects the company to benefit from the rapid growth in the Indian airline industry, driven by competitive fares, rising leisure travel, new airports, and government push.
"Further, the increasing adoption of bank cards (with lounge access as a key benefit) is boosting the pay-per-use revenue model of Dreamfolks. This should help it deliver a strong 20 per cent revenue/28 per cent PAT CAGR over FY24E-26, despite a high base, near-term setbacks due to revised airport charges, and a shift to the spending-based model. We see venturing into international markets as a lucrative long-term opportunity carrying significant potential value," it said.
The brokerage firm sees a significant option value from the nascent expansion into international markets and diversifying into other sectors. This can significantly enhance the value of the business through an expansion of an addressable customer base.
"Given the company's dominant position in the airport lounge access market, it has been successful in building a bridge between its clients and airport lounge operators. Its position in the industry enables it to create interdependencies for its service offerings, enabling it to attract newer clients and operators, which help it to further strengthen its position in the market," it added.
Going forward, Motilal Oswal sees a possibility of gross margins improving from current levels. It expects Dreamfolks' gross margin to bottom out in FY24 at 12.2 per cent and recover to 13 per cent in FY25.
About the company
DreamFolks (DFS), an airport services aggregator and tech platform, connects lounges and premium airport facilities with users of bank credit/debit cards.
The company holds a 75 per cent volume market share in domestic airport lounges and it is the only player with 100 per cent coverage of airport lounges.
It is also the go-to partner for banks seeking to provide complimentary access to paid airport services lounge.
Disclaimer: Business Today provides stock market news for informational purposes only and that should not be construed as investment advice. Readers are encouraged to consult a qualified financial advisor before making investment decisions.