B&K starts 'Buy' on Travel Food Services; sees 34% upside potential

B&K Securities expects Travel Food Services to benefit from India's expanding airport network, with new terminals and capacity additions likely to drive steady passenger growth at 1.5-2x GDP

B&K Securities has initiated coverage on Travel Food Services with ‘Buy’ for a target of ₹1,530 per share. The target price implies 34.4 per cent upside from Thursday’s close at ₹1,138.05. The brokerage values the stock at 40x average FY27–28E EPS, assigning a 2.5x PEG, citing strong cash-flow generation and return ratios. Travel Food Services is currently valued at 33.8x/26.7x FY27/28E earnings, the note said.  In a year, Travel Food Services shares rose 7 per cent as compared to Sensex's rise of 8.7 per cent. 

‘Aspirational India’ and airport expansion to lift footfalls

The brokerage expects Travel Food Services to benefit from India’s expanding airport network, with new terminals and capacity additions likely to drive steady passenger growth at 1.5–2x gross domestic product (GDP). It said airport food and beverage (F&B) demand remains structurally resilient due to semi-captive footfalls, strong visibility tied to traffic throughput and relatively low price sensitivity.

 

 

“With 26 per cent share in airport quick service restaurants (QSRs), 45 per cent in lounges, and the widest national footprint, Travel Food Services is best positioned to benefit from this multi-year, footfall-led growth cycle,” the brokerage said. 

Operational moat in a high-barrier segment

The note highlighted Travel Food Services' execution capabilities in airport environments—24×7, multi-format operations with strict compliance in high-security zones—as a key differentiator. This is reflected in a 94 per cent renewal rate and an average concession life of 8.81 years. The brokerage added that the company’s brand mix—spanning in-house, regional and global partners—creates depth and consistency, reinforcing incumbency and scale through repeat renewals.  ALSO READ | Motilal Oswal bullish on M&M's healthy launch pipeline; retains 'Buy'

JVs with Adani and GMR to widen growth runway

Beyond long-term concessions, Travel Food Services has entered joint ventures (JV) with Adani and GMR Airports, providing structured access to airport operators that together account for roughly 50 per cent of India’s FY25 passenger traffic, the note said. The brokerage believes this portfolio-led engagement could help the company participate in expansions and new airport developments across these networks, improving scale even if equity ownership is lower in JV structures.

Track record on growth, cash flows and returns

The brokerage said Travel Food Services’ leadership has translated into strong financial performance, with system-wide sales and profit after tax (PAT) rising at 35 per cent and 23 per cent compound annual growth rate (CAGR) over FY22–FY25. It highlighted robust cash generation, with Cash flow from operations to Earnings before interest, taxes, depreciation, and amortisation (CFO/Ebitda) conversion of 112 per cent, supporting a cash balance of ₹750 crore as of September 2025. With a debt-free balance sheet, capital-efficient expansion and return ratios consistently above 30 per cent, the brokerage believes the company is well placed to compound growth while maintaining financial resilience.

 

Disclaimer: View and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers discretion is advised.