Few things changed in this Qtr. Would encourage everyone to hear the concall. Mgmt commentary around margins were not good. My earlier assumption (guided by mgmt.) was, they can maintain margins and growth of 25-30% in longer there. That would have been decent turn of events to make this a wealth generator in long term owing to it’s asset light business model. But mgmt. tone on margins has changed completely in this qtrly call. Although as per them, there are some one off like, CAM (Levies from airport operator to lounge operator for common area maintenance – imagine this to be kind of flat maintenance charges by society). Lounge operators are not in a position to absorb this, as they operate on tight margins. Card issuer’s are also pushing back on costs, as the high growth in footfalls plus inflationary lounge costs have meant a very high outgo from their purse. So Dreamfolks had to absorb some of these costs and are now guiding the margins downwards, from 15% earlier to 11-13% now.
This is not a good turn of events. A better scenario would have been 25-20% growth with margins intact. But things are what they are. So market is rightly correcting the valuation to reflect this new reality.
Disc: Buy/sells in last month. Have reduced position size considerably (only after a losing a part of gains from top.). Might add later.
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