4 reasons why ICICI Sec initiates coverage on Travel Food Services with Buy

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ICICI Securities on Travel Food Services: Domestic brokerage ICICI Securities has initiated coverage on Travel Food Services (TFS) with a ‘Buy’ rating and a target price of ₹1,600, citing four key reasons, which include strong growth visibility, deep strategic partnerships, market leadership in airport QSR and lounges, and robust profitability backed by an asset-light operating model.

 

“Travel Food Services (TFS) is India’s leading travel F&B player, operating in the highly regulated and high entry-barrier airport segment. TFS is backed by experienced promoters and a global travel F&B major, SSP Group. Given strong contract retention/win trajectory (over 90 per cent) and India’s growing airport footprint (over 30 new airports by FY29) and passenger traffic (8-10 per cent CAGR), we see TFS delivering a 21 per cent system-wide revenue CAGR over FY25-28E,” said Manoj Menon, Dhiraj Mistry, Ashutosh Joytiraditya and Akshay Krishnan of ICICI Securities in a note dated November 26, 2025.

 

That said, the brokerage believes that TFS’ ability to secure and renew airport concessions, combined with rising per-passenger spending, will support consistent growth across its QSR and lounge businesses. Its 24x7 operating model and low capex intensity further boosts its attractiveness in the airport F&B ecosystem.

Market leadership built on strong execution

 

TFS today commands an estimated 26 per cent market share in travel QSR and about 45 per cent in airport lounges, making it the category leader by a significant margin. Starting from Mumbai airport in 2009, the company has expanded to 15 airports in India, three in Malaysia, and a lounge in Hong Kong. Over the past decade, it delivered an 18 per cent revenue CAGR, driven by network expansion, brand partnerships, and improving per-passenger spending.

The company’s 94 per cent contract retention rate highlights its strong standing with airport operators, while its balanced mix of international brands and in-house concepts provides both brand recall and margin flexibility. In-house brands tend to deliver higher profitability, whereas global brands bring scale, footfall, and volume. TFS’ association with SSP Group, which operates in more than 38 countries, provides access to global best practices and enhances operational efficiencies.  ALSO READ | HDFC Securities starts coverage on Eureka Forbes with 'Buy'; check target

Growth outlook underpinned by rising air travel and new airports

 

India’s aviation sector is expected to maintain strong momentum over the next five years, supported by a double-digit growth outlook for passenger traffic and a robust pipeline of new airports, analysts said. TFS is well positioned to capitalise on this expansion, given its track record of winning concessions at major airports including Mumbai, Delhi, Chennai, Kolkata, Bengaluru, Hyderabad, and its more recent win at Cochin.

 

The company is also slowly building its international presence, particularly in Southeast Asia and the Middle East. As the network scales, TFS is expected to benefit from procurement efficiencies, a centralised supply chain, and shared management resources, resulting in stronger operating leverage.

 

Strategic partnerships strengthen long-term visibility

 

One of the report’s key highlights is TFS’ deep partnerships with India’s largest airport operators, Adani Airports Holdings Ltd. (AAHL) and GMR Airports Infrastructure Ltd. As of FY25, these operators collectively account for around half of India’s passenger traffic. 

 

Despite having minority stakes in the respective joint ventures, 25 per cent with AAHL and 30 per cent with GMR, TFS accounts for both as JVs because of its significant operational involvement. This reflects its active role in day-to-day functioning and business decisions, enabling strong execution and relationship continuity.

 

ICICI Securities expects revenue from the AAHL and GMR joint ventures to grow at a rapid 65 per cent CAGR between FY25-28E, driven by mobilisation of units and lounges, transfer of certain TFS-operated outlets to the JVs, expansion at new airports including Navi Mumbai, and additional contract wins.  ALSO READ | New Tata Sierra seen powering PV push, but brokerages split on stock

Profitability supported by operating leverage

 

Airport F&B operations typically deliver higher profitability due to limited competition and premium pricing power, analysts noted. TFS’ exclusive focus on travel QSR and lounges at major airports provides it with a unique edge. Its round-the-clock operations allow for efficient resource utilisation, while high dwell times and stronger spending by international and leisure travellers boost average ticket sizes.

 

ICICI Securities expects TFS to maintain healthy Ebitda margins of 37-38 per cent over FY26-28E and deliver a long-term RoCE of over 25 per cent. Margins are likely to see only slight expansion over the next few years, driven by an improving lounge mix, operating leverage, and continued cost discipline.

 

Valuation and key risks

 

ICICI Securities values TFS at 42x Sep’27E EPS to arrive at its target price of ₹1,600. It expects consolidated revenue, Ebitda and PAT to grow at 6 per cent, 12 per cent and 15 per cent CAGRs respectively over FY25-28E. The slower growth in consolidated revenue is attributed to the movement of some units and lounges into the JVs. However, system-wide revenue growth remains robust at 21 per cent.

 

Key risks highlighted include the company’s ability to win new concessions, the possibility of losing existing ones, and the growing trend of private airport operators preferring joint venture models.

 

That said, analysts at ICICI Securities believe TFS’ leadership position, strong sector tailwinds, and strategic relationships with major airport operators support its bullish stance on the stock.  Disclaimer: Target price and stock outlook has been suggested by ICICI Securities. Views expressed are their own.