DreamFolks Services IPO shares trade at 20% premium in grey market

24 Aug 2022 , 10:09 AM

DreamFolks Services’ initial public offering has been getting positive feedback in the grey market as a result of better secondary market sentiment and perhaps as a result of the strong reception Syrms SGS Technology’s IPO received.

According to analysts speaking to Moneycontrol, equity shares of the airport service aggregator platform traded in the grey market for about a 20% premium over the top end of the issue price band.

An unofficial marketplace for trading IPO shares is known as the grey market. Unofficial trading in IPO shares often starts when the firm announces its price band and continues until the company lists its shares on the bourses.

Although valuations appear higher due to the impact of the pandemic on earnings, experts indicated that having a 95 percent market share and enjoying early mover advantage in the airport service aggregator segment, together with strong secondary market sentiment, may be supporting the grey market premium.

Before the current minor pullback brought on by weak global cues, the benchmark indices surged more than 18 percent from their June lows, supported by FII buying.

On Wednesday, August 24, DreamFolks Services began accepting subscriptions for its first public offering, with a price range of Rs 308—326 per share. Following the recovery in equity market sentiment from June lows, this is the second public problem that has been revealed. The public issue for Syrma SGS Technology was successfully closed last week.

DreamFolks’ initial public offering (IPO) consists only of an offer to sell 1.72 crore equity shares, which will bring the promoters Rs 562 crore. This means that the company will not receive any money from the offer, which may be one of the reasons why 75% of the issue size is reserved for accredited institutional investors.

Retail and non-institutional investors are allowed to purchase the final 10% and 15% of the offering amount. The deadline for submissions is August 26.

With the help of a technology-driven platform, Dreamfolks Services, India’s leading airport service aggregator, enables passengers to have a better airport experience.  It operates under an asset-light business model that incorporates international card networks, card issuers, and other Indian corporate clients, such as airline firms.

The price-to-earnings ratio after the issuance equals 104.8x FY22 EPS (at the upper end of the issue price band). However, the multiple appears greater mainly because of poorer profitability brought on by challenges that affected the entire business as a result of the pandemic, according to Purves Chaudhari of Angel One.

Because of its asset-light business strategy, DFSL is preferred by air travelers. Additionally, DFSL has concentrated on broadening and expanding its service offering. Accordingly, Chaudhari added that, from a medium- to long-term viewpoint, Angel has a subscribe rating on the matter.