• Sun. Jul 6th, 2025

Is the Travel Food Services IPO worth it or not?

ByNishat Manzar

Jul 6, 2025

The upcoming Travel Food Services (TFS) IPO is set to make waves in the Indian stock market from July 7-9, 2025. For investors seeking exposure to India’s booming aviation sector, this IPO presents a unique opportunity to invest in the country’s leading airport food service provider.

Company Overview: India’s Airport Food Giant

Travel Food Services Limited has carved out an impressive niche in India’s travel hospitality sector. Here’s what makes them stand out:

Market Dominance:

  • Controls 26% market share in airport quick service restaurants (QSR)
  • Commands 45% market share in airport lounges
  • Operates 442 food outlets across India, Malaysia, and highways
  • Manages 37 premium lounges in India, Malaysia, and Hong Kong

Strategic Locations: The company operates in 13 of India’s top 15 airports by passenger traffic, effectively serving 74% of India’s air travelers. This strategic positioning gives them unparalleled access to the country’s growing aviation market.

TFS IPO Details: What Investors Need to Know

IPO ParameterDetails
IPO Opening DateJuly 7, 2025
IPO Closing DateJuly 9, 2025
Share Price Band₹1,045 – ₹1,100 per share
Minimum Investment13 shares (₹13,585 – ₹14,300)
Issue Size₹2,000 crores
Expected Market Cap₹14,485 crores (at upper price)
Face Value₹1 per share

Important Note: This is an Offer for Sale (OFS), meaning existing shareholders are selling their stakes. The company won’t receive any proceeds from this IPO.

Why TFS Could Be Your Next Big Investment

1. Riding the Aviation Boom

India’s aviation sector is experiencing unprecedented growth. With increasing disposable incomes and expanding airport infrastructure, the airport QSR market is projected to grow at 17-19% CAGR through 2034.

2. Impressive Financial Performance

TFS has demonstrated consistent financial strength:

  • Revenue Growth: 21% increase to ₹1,688 crores in FY25
  • EBITDA Margin: Stellar 40% – among the highest in the industry
  • Profit Margin: Strong 21.5% PAT margin
  • Return on Equity: Exceptional 35.5% RoE

3. Strategic Brand Portfolio

The company operates 127 food & beverage brands, including:

  • International favorites: KFC, Subway
  • Popular Indian brands: Hatti Kaapi, Sangeetha
  • In-house brands: Dilli Streat, idli.com, Caféccino

4. Strong Backing

TFS benefits from world-class parentage:

  • SSP Group: Global leader with 3,000+ F&B outlets across 38 countries
  • K Hospitality Corp: Leading Indian hospitality player

Investment Risks to Consider

Market Concentration Risk

Heavy dependence on airport concessions means contract renewals are crucial for sustained growth.

Economic Sensitivity

Air travel demand directly impacts revenue, making the business vulnerable to economic downturns or travel disruptions.

Competitive Pressure

Global players like HMSHost and domestic competitors like Lite Bite Foods pose ongoing challenges.

Financial Snapshot: Strong Numbers Tell the Story

MetricFY25FY24FY23
Revenue₹1,688 cr₹1,396 cr₹1,067 cr
EBITDA₹676 cr₹550 cr₹458 cr
Net Profit₹380 cr₹298 cr₹251 cr
EBITDA Margin40.0%39.4%42.9%
PAT Margin21.5%20.4%22.8%

Valuation Analysis: Is TFS IPO Worth It?

At the upper price band of ₹1,100, TFS trades at approximately 39x earnings – significantly lower than many food service peers trading at 200x+ multiples. This relatively attractive valuation, combined with:

  • Industry-leading margins
  • Strong cash generation
  • Structural growth tailwinds
  • Niche market position

Makes this IPO appealing for long-term investors.

Should You Subscribe to TFS IPO?

Positives: ✅ Market leader in a growing sector ✅ Excellent financial metrics and margins ✅ Strategic airport locations ✅ Strong brand portfolio and global backing ✅ Reasonable valuation compared to peers

Concerns: ❌ Offer for Sale (no fresh capital for growth) ❌ High dependence on airport concessions ❌ Cyclical nature of travel industry ❌ Competitive market environment

Final Verdict

Travel Food Services IPO presents a compelling opportunity for investors seeking exposure to India’s aviation and hospitality growth story. The company’s market leadership, exceptional margins, and strategic positioning make it attractive for long-term wealth creation.

Investment Recommendation: Subscribe for long-term gains, but be prepared for potential volatility due to the cyclical nature of the travel industry.

Disclaimer: This analysis is for informational purposes only. Please consult with your financial advisor before making investment decisions. Past performance doesn’t guarantee future results.