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DreamFolks is a dominant player and India's largest airport service aggregator platform having a unique, asset light, capital efficient business model. DreamFolks' provides services to all the card networks operating in India including Visa, MasterCard, Diners/Discover and RuPay and many of India's prominent card issuers including ICICI Bank, Axis Bank, Kotak Mahindra Bank, HDFC Bank and SBI Cards. DreamFolks has 50 clients as of March 2022. It has a global footprint extending to 1,416 touchpoints in 121 countries across the world out of which 244 touchpoints are in India and 1,172 touchpoints overseas. With 100% coverage across all 54 airport lounges operational in India, DreamFolks has gained market share of over 95% of all India issued card based access to domestic lounges in India. In FY22, DreamFolks facilitated access to 35.3 lakh out of 52 lakh passengers accessing lounges in India (i.e. ~68% total share).

Air travel, credit card penetration set to increase exponentially

India currently has lowest travel propensity vs. western & BRIC nations. However, it is also expected to be the third largest air travel market by 2030. The penetration of digital economy and cards is expected to increase exponentially due the effect of pandemic, large customer base, rising income and changing attitude of the customer. In turn, the financial system will have a greater incentive to manage customer loyalty programmes like lounge access.

Dominant player in airport lounge aggregation industry in India with strong tailwinds

DreamFolks is the largest and dominant airport lounge access provider in India. Its dominant position is underpinned by its estimated market share of over 95% of all India issued card based access to domestic lounges in India. Moreover, it has coverage across 54 operational airport lounges constituting 100% of airport lounges in India.

Expanding into newer sectors/geographies

DreamFolks plans to replicate its deep knowledge of the industry, technology innovation, process expertise and business model across new high growth markets/sectors.

Key risk & concerns

* High reliance on card networks and card issuer companies

* Competition from global players like Priority Pass and Dragon Pass

Priced at FY22 P/E of ~105x at upper price band

The company enjoys over 95% market share) in card based lounge access with its asset light business model. While valuation based on FY22 look stretched, the full business recovery will be visible from FY23. Given the monopolistic nature of business and further growth potential in the air travel and credit card segment, we recommend SUBSCRIBE to this issue for listing gains

India expected to be third largest air travel market by 2030:

Travel propensity is defined as the frequency of travel for a given individual within a nation. The top four countries with the highest propensity to travel via air are noted to be Australia, US, Canada and Japan at present. The countries with low air travel propensity are Bric countries, Indonesia and Mexico. Among the least air travel propensity countries, India is the lowest. However, it is also expected to be the third largest air travel market by 2030 according to an IATA report.

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