IPO Size: Rs. 2,000 cr, Entirely Offer for Sale (OFS)

• By Indian promoter Kapur Family Trust (51% stake to drop to 37%)

Price band: Rs. 1,045 to Rs. 1,100 per share

M cap: Rs. 14,485 cr, implying 14% dilution

IPO Date: Mon 7^th Jul to Wed 9^th Jul 2025, Listing Mon 14^th Jul 2025

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

Airport Quick Service Restaurants (QSR) & Lounge Operator

Travel Food Services is a 16 year old 51:49 joint venture between Kapur Family’s K Hospitality (of Copper Chimney and Blue Sea fame) and LSE-listed travel QSR player SSP Group. Company operates 442 travel QSRs at airports and highways (in Indian and Malaysia), under 127 partner and in-house brands, and 37 airport lounges (in India, Malaysia and Hong Kong) enjoying 24% and 45% domestic market share respectively. Majority business comes from India operations, split almost equally between the travel QSR and lounges.

Growing Opportunity in Travel QSR

Due to increasing number of airports, new terminal additions, India’s growing middle class, outlook for travel QSR remains bright. Diversification into QSRs on highways is another positive.

But a Few Risks

Airport lounge business has historically grown due to third-party initiated complimentary access. It carries long-term risk and growth challenges besides competing with the airport QSRs division itself.

Winning Airport Concession Agreements is the most crucial factor for company’s growth. Average tenure for the concession agreement has been 8+ years, although there have been a couple of regulatory enquiries related to award of contracts, in the past.

EBITDA Margins ~2x of Listed QSRs

FY25 revenue of Rs. 1,688 cr grew 21% YoY, as number of outlets increased by 20% whereas like-for-like sales growth was at 4.6%. Due to higher average order value, gross margin is 82% leading to an operating EBITDA margin of 35.6%, much higher than peer (Jubilant, Devyani, Sapphire, Restaurant Brands) range of 11% to 20%. FY25 PAT was up 28% YoY to Rs. 380 cr, translating into a net margin of 22.5%. EPS of Rs. 27.6 was up from FY24’s Rs. 21.9. 

Valuation on the Lower Side

M cap of Rs. 14,500 cr and enterprise value of Rs. 13,900 cr discounts FY26E PAT of around Rs. 450 cr by a PE multiple of 32x, which is undemanding for high double-digit margin, company’s track record, growing opportunity in travel QSR and consumption sector. High-street QSR peers like Jubilant, Devyani, Sapphire etc. are ruling in three-digit PE multiples. While these sky-rocketing peer valuation may not be sustainable, Travel Food’s PE multiple has scope to expand, even after factoring in its presence being limited to Indian airports and mid-single digit growth in LFL sales.