Travel Food Services Limited (TFSL), a prominent player in the airport F&B and lounge sectors, is set to launch its Initial Public Offering (IPO).
IPO Details
- IPO Dates: The IPO opens for subscription on July 7, 2025, and closes on July 9, 2025.
- Issue Size: The total issue size is ₹2,000.00 crores. The issue is entirely an Offer for Sale of 1.82 crore shares.
- Price Band: The IPO price band is set at ₹1045 to ₹1100 per share. Lot Size: 13 shares, with the minimum retail investment amounting to ₹13,585.
- Allocation Categories: Qualified Institutional Buyers (QIB): Not more than 50% of the Net Offer. Up to 60% of this portion may be allocated to Anchor Investors. Non-Institutional Investors (NII): Not less than 15% of the Net Offer. Retail Individual Investors (RII): Not less than 35% of the Net Offer.
- Lead Managers: The book-running lead managers for the IPO are Kotak Mahindra Capital Company Limited, HSBC Securities & Capital Markets Pvt Ltd, ICICI Securities Limited, and Batlivala & Karani Securities India Private Limited. Registrar: MUFG Intime India Private Limited (Link Intime)
About the Company
- Travel Food Services Limited (TFSL) is a key player in the travel F&B sector
- Inception: The company was incorporated in 2007 as “Bombay Pure Foods Private Limited” and officially changed its name to Travel Food Services Private Limited in 2009. It commenced its first Travel QSR outlet operations in 2009.
- Core Business: TFSL primarily operates in two main areas: Travel Quick Service Restaurants (QSR) and Lounges. It also manages Travel QSRs at select highway sites in India.
- Geographical Presence & Network: As of March 31, 2025, TFSL is present at 18 airports across three countries: India, Malaysia, and Hong Kong. Within India, it operates in 14 airports, with 13 of these being among the 15 largest in the country by passenger traffic in Fiscal 2025. Its network includes 442 Travel QSR units and 37 lounges.
- Employee Strength: As of March 31, 2025, the company had 5,331 on-roll employees and 191 off-roll employees. The management emphasizes a team of almost 6,000 members as part of their ecosystem.
- Promoters: The company is promoted by SSP Group plc, SSP Group Holdings Limited, SSP Financing Limited, SSP Asia Pacific Holdings Limited, Kapur Family Trust, Varun Kapur, and Karan Kapur.
Financials
| Particulars (₹ in millions) | Fiscal 2025 | Fiscal 2024 | Fiscal 2023 |
|---|---|---|---|
| Revenue from Operations | 16,877.39 | 13,963.22 | 10,671.50 |
| EBITDA | 6,763.46 | 5,499.93 | 4,580.54 |
| EBITDA Margin | 40.07% | 39.39% | 42.92% |
| Profit After Tax (PAT) | 3,796.59 | 2,981.20 | 2,512.99 |
| PAT Margin | 21.54% | 20.39% | 22.77% |
Post IPO Market Cap: ₹14,484.74 crores (at upper cap) P/E (FY24): 48.59 times P/E (FY25): 38.15 times
Observation on results: The company has demonstrated consistent and robust growth in both its top-line (revenue) and bottom-line (profit) over the last three fiscal years. Its EBITDA and PAT margins have remained strong, indicating efficient operations and profitability in a competitive sector.
Travel Food Services IPO: Anchor Investors and Allocations
Travel Food Services Limited raised ₹599 crore from 33 anchor investors ahead of its IPO. The anchor book saw participation from leading mutual funds, insurance companies, and global institutional investors. Below are the top 15 anchor investors along with their percentage allocation of the anchor portion:
| Anchor Investor | % Allocation |
|---|---|
| ICICI Prudential Flexicap Fund | 8.92% |
| Abu Dhabi Investment Authority – Monsoon | 8.85% |
| Government Pension Fund Global | 8.85% |
| Kotak Small Cap Fund | 8.85% |
| Baroda BNP Paribas Multi Cap Fund | 5.51% |
| Axis Mutual Fund Trustee Ltd (Axis Consumption Fund) | 4.43% |
| Axis Mutual Fund Trustee Ltd (Axis Multicap Fund) | 4.43% |
| Bajaj Allianz Life Insurance Company Ltd | 4.68% |
| HDFC Life Insurance Company Ltd | 4.68% |
| Fidelity Investment Trust Fidelity Emerging Asia Fund | 6.20% |
| Fidelity Advisor Series VIII – Fidelity Advisor Emerging Asia Fund | 2.65% |
| WhiteOak Capital Flexi Cap Fund | 2.24% |
| Tata AIA Life Insurance Co Ltd Unit Linked India Consumption Fund | 2.34% |
| Tata AIA Life Insurance Company Ltd (Small Cap Discovery Fund) | 2.34% |
| Turnaround Opportunities Fund | 4.68% |
The anchor book was dominated by prominent domestic and global institutions, with mutual funds collectively receiving 43.49% of the anchor allocation through 15 schemes of 7 mutual funds. Other notable participants included JM Financial Mutual Fund, Amundi Funds New Silk Road, Samsung India Securities Master Investment Trust, Bharti AXA Life Insurance, Helios Flexi Cap Fund, SBI General Insurance, Necta Bloom VCC – Regal Fund, Integrated Core Strategies (Asia) Pte. Ltd., and Societe Generale – ODI.
Salient Points
- Business Scenario: TFSL positions itself as a leader in the Travel QSR and Lounge sectors in Indian airports, based on revenue in Fiscal 2025. India’s aviation market is described as one of the largest and fastest-growing globally, with domestic air passenger traffic expected to grow at an 8-9% CAGR and international traffic at 6-8% CAGR from Fiscal 2025 to 2034. The Indian airport Travel QSR sector is projected to grow at a CAGR of 17-19%, and the Lounge industry at 22-24% from Fiscal 2025 to 2034. The company also sees significant opportunities in wayside amenities (WSAs) on India’s expanding expressways.
- Business Operations: The company’s Travel QSR business provides a curated range of food and beverage (F&B) concepts designed for speed and convenience in travel environments. They design, build, operate, and manage these F&B units and lounges. TFSL emphasizes deep understanding of traveler preferences and delivering quality customer experiences. Operational units are in 18 airports across three countries.
- Revenue Model: TFSL’s F&B brand portfolio, comprising 127 brands, includes a mix of 90 partner brands (franchised from international and regional Indian partners like KFC, Pizza Hut, Subway, Bikanervala) and 37 in-house brands (e.g., Caféccino, Idli.com, Dilli Streat). Lounge revenues are generated through partnerships with airlines, credit card companies, banking companies, and lounge access programs.
- Business Strategy: The company aims to grow through retaining existing concessions (achieved a high contract retention rate of 92-94% since inception), like-for-like growth (enhancing sales at existing outlets through continuous innovation, customized offerings, and driving consumer delight), net contract gains (expanding into new outlets, terminals, and airports, both domestically and internationally, including leveraging promoter SSP’s global relationships for international lounge growth in regions like APAC and the Middle East), and strategic partnerships (collaborations with major airport operators like Adani Group through Semolina Kitchens Private Limited and GMR Group through GMR Hospitality Limited for concessions).
- Risks: A significant risk is the high dependence on concession agreements for airport operations, with potential adverse effects from non-renewal or changes in terms. The expansion of government-backed low-cost food kiosks (like Udaan Yatri Café) could impact sales.
- Litigations: A notable point is the past involvement of Sunil Kapur, a member of the Promoter Group, in a CBI FIR and ED summons related to a catering contract.
- Revenue Split: For Fiscal 2025, revenue from operations was split as: Travel QSR at 51.68%, Lounge services at 44.94%, and Management and other services at 3.38%. Within Travel QSR, partner brands contributed 54.37% and in-house brands contributed 45.63% in Fiscal 2025.
- Inventory Days: inventory turnover ratio/days were 12.61 days (FY25), 14.21 days (FY24), and 15.35 days (FY23).
- CAGR (Profits/Margins): Revenue increased by 20.87% from FY24 to FY25, and by 30.85% from FY23 to FY24. Profit After Tax (PAT) increased by 27% between FY24 and FY25.
Peers
| Company | Year | Revenue (Rs cr.) | Net Profit (Rs. Cr.) | NPM % | EBITDA Margins | P/E | Mrkt cap/Sales | D/E |
|---|---|---|---|---|---|---|---|---|
| Travel Food Services | FY25 | 1687.73 | 379.65 | 22.5 | 40.07 | 38.15 | 8.6 | 0.00 |
| Jubilant FoodWorks | FY25 | 8142 | 217 | 2.7 | 19 | 199 | 5.6 | 2.08 |
| Devyani International | FY25 | 4951 | -7 | -0.1 | 17 | – | 4.3 | 2.91 |
| Sapphire Foods India | FY25 | 2882 | 192 | 6.7 | 17 | 385 | 3.7 | 0.92 |
| Westlife Foodworld | FY25 | 2491 | 121 | 4.9 | 13 | 981 | 4.8 | 2.69 |
| Restaurant Brands Asia | FY25 | 2551 | -216 | -8.5 | 11 | – | 1.9 | 2.02 |
Management Commentary Varun Kapur, MD and CEO of TFSL, highlights that the company’s core mission is “ultimately delivering consumer delight” as a consumer-facing company in the aviation space. He states that TFSL operates in Travel QSR and lounges, being the leader in both areas in India. He notes that the business has been operating for 16 years and has shown robust growth (over 20% revenue growth and 27.5% PAT growth in FY25) with consistent returns (51% ROCE in FY25). The management emphasizes their strong contract renewal rates, at approximately 92-94% since inception, which showcases the strength of the business in retaining contracts.
Looking ahead, the management believes TFSL is in the “right country at the right time in the right industry”. They see India as the fastest-growing large aviation market worldwide, with significant tailwinds from government push and private operators, expecting the number of airports to grow to 300 by 2047. There’s also substantial headroom for air travel, with only about 400 million out of 1.4 billion people currently flying. Beyond airports, they are also exploring opportunities in wayside amenities (WSAs) along India’s developing expressways, leveraging their existing expertise.
- Opinion Based on above and the overall macro trends in the industry, I will apply for the IPO. There is moderate rik in the IPO and I may opt to add on a subdued listing if it happens. Listing gains are difficult to predict. GMP stands at Rs. 5-6.
- Post IPO equity capital: Rs. 131.68 crore. P/E for FY 24: 48.59 times. P/E FY25: 38.15 times (annualized)
- Though the issue is priced fully they have some competitive advantages:
- Market Leader: Dominates India’s airport F&B and lounge segments, creating high entry barriers.
- Long-Term Contracts: Secures stable, recurring revenue with long-duration airport agreements and a 93% contract retention rate.
- Diverse Brand Portfolio: Operates 442+ outlets with 127+ brands, offering flexibility and resilience.
- Captive Audience: Benefits from a steady, high-spending customer base within airports.
- Operational Expertise: Proven ability to manage complex airport operations efficiently.
- Financial Strength: Debt-free with strong cash reserves, enabling investment and stability.
- Strategic Backing: Supported by global partners, leveraging international best practices.
- This post is exploratory and educational purposes only.
- Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.