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IPO

Dreamfolks Services IPO Shares Trade at 20% Premium on Grey Market

Dreamfolks Services. Picture Credit: Internet

The IPO of Dreamfolks Services received a good response in the grey market, following improved secondary market sentiment and a well-subscribed IPO of Syrms SGS Technology.

Analysts told Moneycontrol that the airport services aggregator’s shares trade at a premium of about 20% on the grey market, above the upper end of its offering price range.

Grey markets are unofficial platforms for trading IPO shares. Generally, unofficial trading of IPO shares begins when the company announces the price range and continues until the public company’s stock is listed on the exchange.

Experts say having a 95% market share and enjoying the first-mover advantage in the airport service aggregator space, coupled with positive secondary market sentiment, could support a grey-market premium. However, valuations may be affected by the pandemic’s higher earnings outlook.

The benchmark rose more than 18% from a June low on the back of FII buying before pulling back slightly on global weakness cues. DreamFolks Services launched its IPO today with a subscription price of Rs 308-326 per share. It was the second IPO following a recovery in stock market sentiment from June lows. Syrma SGS Technology completed its IPO last week.

DreamFolks’ IPO is about an offer to sell 1.72 crore shares, which will bring promoters Rs 562 crore. Therefore, the company will not receive any funds from the offer, which may be one of the reasons for setting aside 75% of the offering size for accredited institutional investors.


The remaining 10% and 15% of the issuance size are reserved for retail and non-institutional investors. This issue will end on August 26.


Dreamfolks Services is a major player and largest airport services aggregation platform in India, leveraging technology-driven platforms to provide passengers with an enhanced airport experience. It follows an asset-light business model that integrates India’s global card network, card issuers and other Indian corporate customers, including airlines.


“Post-issue price-to-earnings (P/E) ratio of 104.8x FY22 EPS (at the upper end of the issue price range). However, the multiple looks higher, mainly due to lower profitability due to the pandemic – causing issues across the industry,” Angel One Purves Chaudhari said.


DFL’s asset-light business model has won over air travellers. In addition, DFSL has been focusing on diversifying and increasing its service portfolio. So, from a mid-to-long-term perspective, Angel has a subscription rating on this issue, Chaudhari said.

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