DreamFolks tanks 28% in 2 days on disappointing Q1 performance

The company said one-off abnormal increase in common area maintenance charges has led to increase in lounge cost.

Shares of DreamFolks Services slumped 15 per cent to Rs 562.50 on the BSE in Thursday’s intra-day trade on the back of heavy volumes. In past two days, the stock of airport services company has tanked 28 per cent after it reported a disappointing set of numbers for June quarter (Q1FY24).

In Q1FY24, the company’s earnings before interest, taxes, depreciation, and amortization (ebitda) was down 3.6 per cent to Rs 18.69 crore, due to higher operational cost, including cost of services and employee cost. Ebitda margin contracted by 500 bp to 7.01 per cent from 12.1 per cent in Q1FY23.

The company said one-off abnormal increase in common area maintenance (CAM) charges has led to increase in lounge cost. Time lag between contract renewals on both supply and demand side has impacted the gross margins. Ebitda decline in Q1FY24 is partly associated with ESOP charges, the company said.

DreamFolks’ profit after tax declined 3.8 per cent year-on-year (YoY) at Rs 12.96 crore as against Rs 13.44 crore in a year ago quarter. However, revenue rose 66.2 per cent YoY at Rs 266 crore.

The company said multiple tailwinds observed in the form of increased cards in circulation, changing travel trends and jump in air traffic. Significant number of touchpoints added, which will help in the future growth trajectory, it added.

Significant uptick in the number of people preferring Air Travel over Road and Rail travel, owing to better connectivity, falling differential in fares and improving experience. With a complete market recovery, even beyond preCovid levels, major events across the globe and rising leisure travel, Air Traffic around the globe is rapidly increasing alongside a growing preference for comfort and luxury, the company said.

DreamFolks is India’s leading airport services aggregator and provides an in-house proprietary technology platform that allows its clients such as Banks, Card Networks, Airlines, OTAs and Enterprises to create custom offerings for their end consumers.

DreamFolks 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 per cent in the domestic lounge access market for India issued debit and credit programs.

At 11:44 am; the stock was trading 14 per cent lower at Rs 569.75 on back of over 10-fold jump in its average trading volumes. A combined 4.75 million shares representing nearly 9 per cent of total equity of the company had changed hands on the NSE and BSE. In comparison, the S&P BSE Sensex was down 0.5 per cent at 65,690.