Highlights:
| Issue Size –: 1,81,81,818 | shares Issue Open/Close – 7 July / 9 July, 2025 |
| Price Band (Rs.) 1045 – 1100 | Issue Size (Rs.) – 20,000 mn |
| Face Value (Rs) 1 | Lot Size (shares) 13 |
Travel Food Services Limited (TFSL), incorporated in 2009, operate a travel quick service restaurant (Travel QSR) and a lounge (Lounge) business across airports in India, Malaysia and Hong Kong with 26 pct market share in Indian airport travel QSR sector and 45 pct in Indian airport Lounge sector.
With 442 Travel QSR outlets and 37 Lounges across India, their Travel QSRs are predominantly situated within airports, with select outlets in highway sites. Their Lounge business comprises designated areas within airport terminals, accessible primarily by first and business class passengers, members of airline loyalty programmes, select credit card and debit card holders and members of other loyalty programmes.
In Travel QSR they offer quick service formats adapted for the travel environment, such as fast food, cafes, bakeries, food courts, and bars and they have developed a portfolio of in-house brands through close collaborations between experienced culinary, marketing and operations teams and based on understanding of the unique needs of travellers.
Their lounges operated through their Associates and Joint Ventures. They have partnered, directly and through third parties, with domestic and international airlines, card networks and issuers, loyalty partner programmes, Lounge access programmes and financial institutions (collectively, Lounge Partners) to provide their customers with access to their Lounges.
Since inception, the company has maintained a contract retention rate (i.e. the number of airport concession agreements which expired and were either renewed or won back as a percentage of the total number of airport concession agreements which expired) of 93.94 pct.
Out of the total proceeds of Rs. 20,000 mn, the entire ~Rs. 20,000 mn would go towards existing selling shareholders of the company. The company expects that the proposed listing of its Equity Shares will enhance their visibility and brand image.
Key Highlights
- India is expected to gain growth momentum in domestic and international air passengers, with domestic air passenger traffic poised to grow a CAGR of 8 pct – 9 pct and international air passenger traffic a CAGR of 6 pct to 8 pct from FY25 to FY34. The Indian airport Travel QSR sector is anticipated to grow at a CAGR of 17 pct – 19 pct, while the Indian Lounge industry is expected to grow at a CAGR of 22 pct to 24 pct from FY25 to FY30.
- Their travel QSR and Lounge product/service lines, they operated under concession agreements for outlets located at airports and for certain Travel QSRs, at highway sites. The term of the airport concessions for their Travel QSRs and Lounges typically ranged from five to 20 years, or an average tenure of 8.21 years as of March. These arrangements provide for either Travel QSRs or Lounges only or both Travel QSRs and Lounges.
- TFSL planning the roll-out of their ARAYA umbrella brand for Lounge business, under which they will offer different Lounge brands, ranging from luxury to premium and value. Together with SSP, they aim to roll out this Lounge system globally with them operating Lounges in India, the Middle East (excluding Egypt) and Southeast Asia directly.
- Their category management teams analyse outlet-wise consumption data, menu mix data, and gross margin by product and category to assess product profitability and margin contributions. In coordination with their operations and culinary teams, they leverage this analysis to drive higher margins or higher ticket sales through menu changes, layout adjustments, upselling and product combinations.
- They scrutinise all operating costs and seek to drive further business efficiencies. They analyse discarded waste in dustbins within their Lounges to identify instances where portion sizes may be too large, such as for appetizers and desserts. This allows them to right-size portions of each dish, improving their cost efficiencies and reducing waste.
- TFSL’s key growth strategies includes (i) Optimise product offerings and service to grow like-for-like sales (ii) Grow new space in existing markets and build strategic presence in new markets (iii) Deliver operating synergies and leverage scale benefits (iv) Optimise
capital expenditure through best practices (v) Win with People. - TFSL reported growth over FY23 to FY25, with sales rising from Rs. 10,672 mn to Rs. 16,877mn, reflecting a CAGR of ~25.50 pct. EBITDA grewat ~21.80 pct CAGR, reaching Rs. 6,763mn in FY25. Profit rose to Rs. 3,797 mn, registering a CAGR of ~23.2 pct. Though ROE declined from 37.8 pct to 35.5 pct, ROCE remained at 51.4 pct in FY25, indicating sustained operational efficiency.
Key Risks
- Adverse order, monetary penalty or ban against card networks and card issuers may impact their business operations and financial condition.
- Lounge services contributed significant pct of sales during past 3 years, hence lounge business might be negatively affected by a dip in no. of lounge partners’ customers, due to decline in no. of credit cards and debit cards offering free lounge access
- Concession agreements impose restrictions on operations, pricing benchmarks, minimum levels of capex required to undertake and the right of airport operators to relocate or suspend operations, could unfavourably affect operations.
- Business growth can be severely affected by shifts in operating models of airport operators, reducing profit share derived from relevant concession agreements with airport operators.
Financial Performance
| Particulars | FY23 | FY24 | FY25 |
|---|---|---|---|
| Sales (Rs. mn) | 10,672 | 13,963 | 16,877 |
| EBITDA (Rs. mn) | 4,581 | 5,500 | 6,763 |
| EBITDA Margin (%) | 42.92% | 39.39% | 40.07% |
| Profit (Rs. mn) | 2,513 | 2,981 | 3,797 |
| Profit Margin (%) | 23% | 20% | 22% |
| ROE (%) | 37.79% | 33.57% | 35.47% |
| ROCE (%) | 53.87% | 46.14% | 51.40% |
Peer Comparison Based on FY25 Financials
| Particulars | TFSL | Jubilant Foodworks | Devyani Intl | Sapphire Foods | Westlife Foodworld | Restaurant Brands Asia |
|---|---|---|---|---|---|---|
| Sales (Rs. mn) | 16,877 | 81,417 | 49,511 | 28,819 | 24,912 | 25,507 |
| EBITDA (Rs. mn) | 6,763 | 15,722 | 8,422 | 4,925 | 3,301 | 2,737 |
| EBITDA Margin | 40.07% | 19.30% | 17% | 17.10% | 13.20% | 10.70% |
| Profit (Rs. mn) | 3,797 | 2,171 | -69 | 167 | 121 | -2,328 |
| PAT Margin (%) | 21.54% | 2.64% | -0.14% | 0.57% | 0.48% | -9.02% |
Disclaimer: The views shared in blogs are based on personal opinions and do not endorse the company’s views. Investment is a subject matter of solicitation and one should consult a Financial Advisor before making any investment using the app. Investing using the app is the sole decision of the investor and the company or any of its communication cannot be held responsible for it.
