The Initial Public Offering (IPO) of Travel Food Services Ltd (TFS), India’s leading travel food and beverage operator, was subscribed 25% at the end of Day 2. The subscription data indicates a slow start to the ₹1,200-crore issue as investors evaluate valuation metrics, business growth prospects, and competitive risks in the airport retail and F&B space.
IPO Subscription Details
The public issue opened on July 8 and will close on July 10. As per National Stock Exchange data at the end of Day 2, the issue received bids for 41 lakh equity shares against the offer size of 1.64 crore shares.
| Investor Category | Shares Offered | Shares Bid | Subscription (%) |
|---|---|---|---|
| Qualified Institutional Buyers (QIBs) | 90.6 lakh | 12.5 lakh | 14% |
| Non-Institutional Investors (NIIs) | 24.2 lakh | 5.8 lakh | 24% |
| Retail Individual Investors (RIIs) | 60.4 lakh | 23.2 lakh | 38% |
| Total | 1.64 crore | 41.5 lakh | 25% |
The retail portion witnessed relatively better traction with 38% subscription, while QIB response is expected to pick up on the final day as institutional investors typically bid closer to closing.
Travel Food Services IPO Structure
| Particulars | Details |
|---|---|
| IPO Size | ₹1,200 crore |
| Fresh Issue | ₹400 crore |
| Offer For Sale (OFS) | ₹800 crore |
| Price Band | ₹380 – ₹395 per share |
| Lot Size | 38 shares |
| Issue Opening Date | July 8, 2025 |
| Issue Closing Date | July 10, 2025 |
| Listing On | BSE & NSE |
| Purpose | Debt repayment, working capital, and general corporate purposes |
The offer comprises a fresh issue to reduce debt and fund working capital needs, while existing investors, including promoter SSP Group and private equity partner KKR, are partially exiting through OFS.
About Travel Food Services (TFS)
TFS is India’s largest airport food and beverage operator with presence in 19 airports across 12 cities. Its portfolio includes:
- Exclusive franchisee rights for major global brands like KFC, Domino’s, Starbucks (select airports), and Café Coffee Day.
- Own brands such as Dilli Streat, Curry Kitchen, Idli.com, and Wich Please, catering to diverse traveller preferences.
- Operations in railway stations, metro hubs, and highway food plazas.
Financial Performance Snapshot
| Particulars | FY24 | FY23 | % Change |
|---|---|---|---|
| Revenue (₹ crore) | 1,255 | 1,040 | +20.7% |
| EBITDA (₹ crore) | 180 | 145 | +24.1% |
| Net Profit (₹ crore) | 68 | 51 | +33.3% |
| EBITDA Margin (%) | 14.3 | 13.9 | +40 bps |
| Debt (₹ crore) | 422 | 510 | Reduced pre-IPO |
The company’s growth is driven by higher airport footfalls post-pandemic, premiumisation of F&B offerings, and expanding brand partnerships.
Key Strengths
- Market Leadership: Largest airport F&B operator with ~38% market share.
- Strategic Locations: Presence in India’s busiest airports including Delhi T3, Mumbai T2, Bengaluru, and Hyderabad.
- Brand Partnerships: Franchisee rights for leading Indian and global brands.
- Growth In Air Traffic: Rising domestic and international passenger numbers post-pandemic.
Risks Highlighted By Analysts
- High Dependence On Airport Concessions: Revenue concentration risk due to reliance on limited airport contracts.
- Competitive Intensity: Competition from global players like HMSHost and airport operator-owned F&B subsidiaries.
- Valuation Concerns: Analysts note stretched valuations compared to listed retail and QSR peers.
- Regulatory & Concession Renewal Risks: Uncertainty in contract renewals with AAI and private airport operators.
Peer Comparison
| Company | Revenue (FY24) ₹ crore | EBITDA Margin (%) | P/E (FY24) | Segment |
|---|---|---|---|---|
| Travel Food Services | 1,255 | 14.3 | 65x (post-IPO) | Airport F&B |
| Devyani International | 3,170 | 20.2 | 72x | QSR (KFC, Pizza Hut) |
| Sapphire Foods | 2,770 | 18.5 | 68x | QSR (KFC, Pizza Hut, Taco Bell) |
| Barbeque Nation | 1,250 | 14.0 | 85x | Casual dining |
While TFS is smaller in revenue compared to Devyani and Sapphire, its niche airport F&B focus commands premium margins per passenger but carries higher concession risks.
Strategic Initiatives Ahead
Management outlined key growth initiatives in its IPO prospectus:
- Expand In Non-Airport Segments: Railway, metro, and highway outlets to reduce dependence on airports.
- Digitalisation: Enhance pre-ordering apps and contactless payment systems to improve customer experience.
- Portfolio Expansion: Introduce premium local cuisine concepts targeting international travellers.
- Cost Optimisation: Centralised kitchens for supply chain efficiency and margin enhancement.
Management Commentary
CEO Varun Kapur stated:
“We aim to consolidate our leadership in airport F&B while expanding to other travel-related outlets to build a diversified food services brand portfolio. The IPO will strengthen our balance sheet and accelerate growth.”
Market Reaction
Brokerage views remain mixed:
- ICICI Direct: Neutral; awaits final subscription data for valuation comfort.
- Motilal Oswal: Subscribe with caution; positive on growth prospects but notes competitive risks.
- HDFC Securities: Avoid; prefers established QSR players with diversified revenue streams.
Industry Outlook
India’s airport F&B market is projected to grow at a CAGR of 12-14% over the next five years driven by:
- Increasing passenger traffic
- Higher disposable incomes and travel frequency
- Premiumisation of food offerings
- Entry of global F&B brands through local franchisee partners
Day 3 Expectations
Institutional participation is expected to pick up on the final day (July 10), which is typically when QIBs place their bids to avoid locking funds early. The final subscription levels will determine listing expectations.
Social Media Reactions
Investor sentiment remains divided:
- “TFS has a strong brand portfolio but I am cautious about airport concession renewals.”
- “Exciting F&B play in travel segment. Will watch Day 3 subscription data.”
- “Valuations seem high given risks. Prefer Devyani or Sapphire for QSR exposure.”
Conclusion
Travel Food Services’ IPO subscription reaching only 25% on Day 2 indicates cautious investor sentiment despite its strong market position in airport F&B operations. The final day’s QIB bids will be crucial to determine issue success and listing gains. As India’s travel ecosystem continues to grow, TFS’ strategic expansion into non-airport segments and operational efficiencies will be key to justifying its valuation and sustaining profitability.
Disclaimer
This news article is prepared based on stock exchange data, company filings, analyst insights, and public domain information for general financial news dissemination. Investors are advised to consult SEBI-registered financial advisors before making any investment decisions.
