Home / Markets / Ipo /  DreamFolks Services IPO: GMP jumps after strong retail subscription. Should you apply?

DreamFolks Services IPO: The initial public offer (IPO) of DreamFolks Services Ltd opened for subscription on 24th August 2022 and the public issue will remain open for bidding till 26th August 2022. The public offer worth 562.10 crore got fully subscribed on day one of bidding. On day two, the issue was subscribed over 6 times with retail segment subscribed 19 times. This strong response by retail investors has influenced grey market as well. As per the market observers, shares of DreamFolks Services Ltd are available at a premium of 83 in grey market today.

DreamFolks Services Ltd. IPO Day 2 subscription (as of 5 pm)

QIB: 0.60x

HNI: 8.40x

Retail: 19.10x

Overall: 6.09x

DreamFolks Services IPO GMP

According to market observers, after strong response by retail investors to the public issue, DreamFolks IPO grey market premium (GMP) surged from 60 to 83 in just one day. They said that for last two days, secondary market mood has remained positive and it has influenced the grey market as well. However, the most dominating reason for sharp upside move in Dreamfolks IPO GMP today is strong response by the retail investors on day one. They said that the grey market premium may further rise as market mood is expected to remain positive in near term.

What this GMP means?

Market observers said that DreamFolks IPO GMP today is 83, which means grey market is expecting that DreamFolks IPO listing would be around 409, around 25 per cent higher from its price band of 308 to 326 per equity share. They said that such a sharp rise in DreamFolks IPO GMP today signals strong listing premium for the investors.

However, stock market investors said that GMP is not an ideal indicator of listing premium from a public issue because it has nothing to do with the financials of the company.

DreamFolks Services IPO: Apply or not?

On DreamFolks IPO review, Swastika Investmart research report says, "DreamFolks will be one of the biggest beneficiaries of the aforementioned theme due to its first mover advantage and dominant position in the lounge access market (68 per cent share in terms of volumes). Further, it has significant exclusivity for India-issued credit and debit card programs in key locations. The biggest competitive advantage for the company is its network effect; the tie-up with all the 54 lounges in India enables it to provide a one-stop solution to its clients and strengthen its position between the clients and the lounge operators. Additionally, the company has created a proprietary technology platform that ensures scalability. Although the company doesn’t have any competitors in the domestic market, they face competition from large global programs such as Priority Pass, and Dragon Pass which have significant experience and a huge international presence. Despite the asset-light operations, the company has witnessed volatile cash flows due to high receivables. Finally, the nature of the issue is OFS which will lead to a 33% dilution of the promoter’s stake and premium valuations (P/E of 104.82 based on FY22 EPS) makes it suitable for long-term investors with moderate to high-risk appetite. And therefore, we recommend a "SUBSCRIBE" rating only for “High Risk Investors".

Giving 'subscribe' tag to the public issue, Reliance Securities says, "DreamFolks Services Ltd has a strong business revenue potential over next decade on the back of a) Healthy air traffic growth, b) Increasing issuance of credit cards and c) Better awareness of usage of cards for lounges and higher penetration from current low level of ~5%. In view of strong business moat, healthy recovery in Air Passenger traffic, increase Lounge services, multi-fold revenue growth potential, unique asset light and efficient business model, we recommend SUBSCRIBE to the issue."

DreamFolks IPO details

The public issue is available for bidding at a price band of 308 to 326 per equity share and it will remain open for bidding till 26th August 2022. DreamFolks IPO subscription status informs that on day two of bidding by 3:10 PM, the public issue has been subscribed 4.43 times whereas its retail portion has been subscribed 15.59 times. The public issue is proposed for listing on both NSE and BSE and tentative DreamFolks IPO listing date is 6th September 2022. The issue is 100 per cent OFS in nature.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

Asit Manohar
Chief Content Producer at Live Mint Digital Team
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