The airport services sector faced a jolt recently as a key player in the segment, announced a major strategic shift, sending ripples through investor sentiment. The company has discontinued its domestic lounge business, which contributed a substantial 93 percent of revenue in fiscal 2025.
While the move has raised concerns over medium-term revenue targets, global lounge and non-lounge offerings, which contributed roughly 7 percent of revenue in FY25, are expected to drive future growth. The market is now closely watching how this shift will affect operational scale and profitability.
Dreamfolks Services Ltd has declined 86.56 percent from its all-time high of Rs. 780 in July 2023, implying that an investment of Rs. 1,00,000 made at its peak would now be worth Rs. 13,440.
About The Company
Dreamfolks Services Ltd, headquartered in Gurugram, Haryana, was incorporated in April 2008 by Mr. Mukesh Yadav, Mr. Dinesh Nagpal, and Ms. Liberatha Kallat. The company is India’s largest airport service aggregator platform, providing a wide array of offerings including lounge access, food and beverages, spa services, meet-and-assist, airport transfers, transit hotels and nap rooms, and baggage transfer. Its clientele includes major banks, card networks, online travel agencies, airlines, and enterprises. As of September 2025, the company has a market capitalization of Rs. 558 crore and its shares are trading at a current market price of Rs. 104.75.
Domestic Lounge Services Halted
In a significant development, Dreamfolks has halted its domestic lounge operations effective September 16, 2025. According to CRISIL Ratings the domestic lounge segment, which generated about 93 percent of the company’s FY25 revenue, will see its existing suppliers, including TFS, Encalm Hospitality, Adani Digital, and Semolina Kitchens, phased out over Q2 and Q3FY26. The company has already lost key customer programs from ICICI Bank and Axis Bank since July 2025. This cessation is expected to materially affect the scale of operations, which could fall short of previously projected annual revenues of Rs. 1,400-1,600 crore over the medium term.
Following the announcement, Dreamfolks CMD Liberatha Peter Kallat stated that clients were being pressured by competitors to withdraw from existing contracts, and the company had also received indirect acquisition offers. She further alleged that airport operators were behind these pressures, although she did not name any specific entities. In response, Adani Airports’ CEO highlighted on LinkedIn that airport lounge access could now be managed directly without intermediaries, implying a shift in market dynamics.
Despite the domestic setback, the company continues to operate 76 lounges across India with a domestic-to-international mix of 77:23, and maintains a long-term goal of expanding to 295 lounges by 2040.
Future Outlook
CRISIL Ratings has noted a weakening in Dreamfolks’ business risk profile due to the discontinuation of domestic lounge services. While domestic lounge services are still ongoing, the pace of operations has slowed considerably and is expected to moderate gradually over the medium term. As a result, the company may fall short of earlier revenue expectations of Rs. 1,400-1,600 crore annually. The global lounge and non-lounge segments, although currently contributing only around 7 percent of revenue, are anticipated to grow and partially offset domestic losses.
Financially, the company maintains a robust profile with nil debt, significant net worth, free liquid investments of Rs. 89.77 crore, and free cash and bank balances of Rs. 30.7 crore as of March 2025. With an asset-light model and low fixed costs (estimated at Rs. 3-4 crore per month), Dreamfolks’ financial strength is expected to remain resilient. However, any larger-than-expected business impact could affect liquidity and overall financial risk.
The company’s expansion into non-lounge services via partnerships with RedBeryl, Grey Wall, and VFS Global including global lounges, luxury social clubs, golf clubs, spa and wellness services, airport dining, cab transfers, railway lounges, and other travel assistance services which positions it to diversify revenue streams. The promoters’ extensive industry experience is likely to help navigate challenges from domestic lounge discontinuation and aid further expansion into other segments.
Financial Snapshot
On a sequential basis, revenue rose from Rs. 314 crore in Q4FY25 to Rs. 349 crore in Q1FY26, marking an increase of 11.1 percent. Operating profit improved from Rs. 20 crore to Rs. 27 crore, higher by 35 percent. Profit before tax advanced from Rs. 21 crore to Rs. 28 crore, up 33.3 percent, while net profit climbed from Rs. 15 crore to Rs. 21 crore, registering a growth of 40 percent.
On a yearly basis, revenue increased from Rs. 321 crore in Q1FY25 to Rs. 349 crore in Q1FY26, a growth of 8.7 percent. Operating profit rose from Rs. 23 crore to Rs. 27 crore, higher by 17.4 percent. Profit before tax improved from Rs. 23 crore to Rs. 28 crore, advancing 21.7 percent, while net profit grew from Rs. 17 crore to Rs. 21 crore, up 23.5 percent.
Conclusion
Despite the discontinuation of its domestic lounge business, Dreamfolks Services Ltd demonstrates strong financial resilience and potential growth through its global and non-lounge offerings. However, the halt in its primary revenue stream raises questions about its ability to sustain previous growth trajectories.
Written by Manan Gangwar
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