Travel Food Services share price slips 4% after tepid listing. Should you buy, sell or hold?
Following the lackluster listing, the stock moved lower, falling 4.2% to hit the day's low of ₹ 1,077 apiece. However, it recovered slightly and was last seen trading at ₹ 1,088.90, down 3.21% from the listing price.
Though the stock made a weak market debut, analysts remain optimistic about the company's long-term growth prospects, citing its presence across 18 airports and a portfolio of 442 outlets and 37 lounges.
Mahesh M. Ojha, AVP of Research and BD at Hensex Securities, highlighted that the company is a leading player in the fast-growing Indian airport travel quick service restaurant (Travel QSR) and lounge sectors, with a market share of approximately 26% in the Travel QSR segment and around 45% in the Lounge segment as of FY2025.
He pointed out that the company manages 397 Travel QSRs across India and Malaysia, offering 117 partner and proprietary brands. He added that the business is debt-free, generating positive cash flows, and currently valued at 16.58 times FY25 EV/EBITDA.
According to Ojha, investors with a long-term view may continue to hold the stock, while those looking for short-term gains can consider booking profits.
Gaurav Goel, founder and director at Fynocrat Technologies, also remains positive on the fundamentals of the company despite weak market sentiment. He emphasized the company's strong backing from promoters SSP Group and K Hospitality, along with its consistent financial performance, including ₹ 1,688 crore in FY25 revenue and healthy EBITDA and PAT margins of 32.8% and 21.5%, respectively.
Goel noted the company's industry-leading return ratios, such as ROE of 34.5% and ROCE of 47.7%, supported by its asset-light model and long-term concession agreements. While short-term listing gains may be limited, he believes the company is well-positioned as a differentiated consumption play in a high-growth segment driven by rising Indian air travel and expanding airport infrastructure.
Established in 2007, the company is a prominent player in India's airport-based food and beverage sector. The company operates in the quick service restaurant (Travel QSR) and airport lounge segments, offering a comprehensive portfolio of food and hospitality solutions tailored for travelers.
As of June 30, 2024, the company manages 397 Travel QSR outlets across airports in India and Malaysia. Its food and beverage operations span across 117 partner and in-house brands, delivering diverse cuisines and formats that cater to the needs of passengers looking for fast, convenient, and quality dining experiences while in transit.
In addition to QSRs, Travel Food Services also runs premium lounges within airport terminals, primarily serving first and business-class travelers, members of airline loyalty programs, and select credit/debit card holders. These lounges offer a comfortable, upscale environment for travelers to relax before their flights.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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