Dreamfolks Services surges after Motilal Oswal initiates coverage with buy

Dreamfolks Services, which provides lounge services at airports, saw its shares soar by 5 per cent to close at Rs 507.95 after brokerage firm Motilal Oswal initiated coverage on the stock with a buy rating for target price of Rs 650, indicating upside of 34 per cent from its Tuesday’s closing price.

Motilal Oswal highlighted Dreamfolks Services’ dominant position in the domestic airport lounge market, with over 75 per cent volume market share and complete coverage of airport lounges across the nation.

The report highlights the significant growth opportunities for Dreamfolks Services within the dynamic airline industry.

With competitive fares, increasing leisure travel, the establishment of new airports, and government support, the industry is poised for rapid expansion. Moreover, Motilal Oswal points out the favourable trend of rising bank card adoption, which enhances Dreamfolks Services’ pay-per-use revenue model.

Despite facing near-term challenges such as revised airport charges and a transition to a spending-based model, Dreamfolks Services is projected to achieve a robust 20 per cent revenue and 28 per cent profit after tax (PAT) compound annual growth rate (CAGR) over FY24-26. Motilal Oswal stressed the long-term potential of venturing into international markets, which could augment Dreamfolks Services’ value proposition.

The forecast reflects Motilal Oswal’s confidence in Dreamfolks Services’ ability to capitalise on market opportunities and deliver sustained growth in the coming years.