DREAMFOLKS - DREAMFOLKS SERVICES LIMITED Share Price

In the earnings conference call for Q1 FY '26, management of Dreamfolks Services Limited provided an optimistic outlook, reflecting a strategic focus on executing long-term growth and diversification beyond airport lounge services. The company reported revenues of INR 349 crores, achieving a year-on-year growth of 8.8%, while adjusted EBITDA reached INR 30 crores, with a margin of 8.7%, marking an 18.7% increase year-on-year.

Key forward-looking points outlined by management include:

1. Service Diversification: The firm anticipates that services beyond lounge offerings will contribute approximately one-third of total revenue sooner than projected. New service lines include golf, wellness packages, and access to premium social clubs, aimed at enriching the customer experience.

2. Geographical Expansion: Dreamfolks is focused on increasing its presence in Southeast Asia and the Middle East, forming strategic partnerships to bolster its service offerings. The aim is to penetrate non-metro Indian cities, where aspirational travel and infrastructure growth are accelerating.

3. Partnerships and Client Relationships: Management emphasized the continued strength of existing client contracts, despite some banks shifting their focus. The company onboarded over 40 new enterprise clients in the past year, indicating a strong demand for bundled lifestyle offerings that enhance corporate benefits.

4. Technological Enhancements: A commitment to developing a cloud-based tech platform aims to improve real-time service delivery and customer experiences. Management noted that the flexibility of their platform allows for customized service offerings, enhancing their competitive edge.

5. Market Dynamics: The credit card market is projected to grow significantly, with expectations to reach INR 39.3 trillion by 2029. Dreamfolks aims to leverage this growth by expanding its integrated service model, aligning with modern consumer behaviors.

Overall, the management expressed confidence in their repositioning strategy and the sustainability of their business model, emphasizing an agile response to market changes.

1. Question: "Can you please justify what will be the impact on our business regarding the banks switching off contracts?"

Answer: We are currently assessing the extent of impact, as two banks have already moved from our platform. However, it is essential to note that these contracts are still ongoing, and multiple other programs remain active. While there is pressure from some banks, we maintain that a portion of our business continues with these clients, ensuring that our relationship is intact.

2. Question: "Can you quantify the number of pax that visited our lounges during the quarter?"

Answer: In Q1 FY '26, we reported that 2.58 million passengers visited our lounges. This reflects our ongoing commitment to providing exceptional services within the lounge experience and underscores our continued relevance in the market.

3. Question: "What are we doing to stop other services being moved from our platform?"

Answer: We recognize the shifting dynamics in our competitive landscape. Currently, our focus is on broadening our value proposition by developing comprehensive service packages that move beyond just lounge access. We are strategically creating more diverse offerings that cater to modern consumer needs, making it challenging for competitors to replicate our model.

4. Question: "Can you provide the revenue split or percentage-wise on lounge and non-lounge services?"

Answer: For this quarter, our revenue from lounge services accounted for approximately 93%, while non-lounge services made up the remaining 7%. This is consistent with our previous quarter's presentation, reflecting our current focus on expanding non-lounge offerings.

5. Question: "What are the reasons why some major banks have shifted their business away from Dreamfolks?"

Answer: While the situation is dynamic, it's worth noting that our relationships remain strong with these clients, as they are still utilizing other programs we offer. Any shifts can be attributed to broader market conditions rather than dissatisfaction, and we continue to explore new service additions with them to enhance our offerings.

6. Question: "Regarding employee benefit expenses, is the increase primarily due to hiring or wage growth?"

Answer: The increase in employee expenses is primarily due to business as usual, as we previously hired additional staff to drive our enterprise business growth. Future hiring will continue to align with business needs, enabling us to scale effectively without extravagant increases in costs.

7. Question: "Can you explain the recent margin improvement from 11.7% to around 13%?"

Answer: The boost in margin stems from a favorable product mix along with disciplined cost management. However, as we integrate more non-lounge services, the specific implications of this shift on margin sustainability will unfold in the upcoming quarters as we gain additional insights.

8. Question: "What are the strategic initiatives being pursued to mitigate revenue loss due to the banks' migrations?"

Answer: We are actively exploring strategic partnerships and acquisitions to enrich our service portfolio. These acquisitions will not only enhance our offerings but also boost our revenue streams, thus helping stabilize our business as we navigate these transitional periods.