DreamFolks Q1: Revenue And Net Profit Take A Upswing | NDTV Profit - video Dailymotion

NDTV Profit

Watch DreamFolks Q1: Revenue And Net Profit Take A Upswing | NDTV Profit - NDTV Profit on Dailymotion

Transcript

00:00Liberatha Kalath, MD and Chairperson of DreamFolks.

00:04Of course, DreamFolks venturing now into highway dining.

00:09And it'll be good to try and understand and break down as to what that means both for DreamFolks as a company

00:15as well as for this new venture in terms of this specific business that DreamFolks is going to be engaging on.

00:24Welcome, Ms. Kalath.

00:26I want to first try and understand, you know, what does this mean?

00:33Or how quickly are you going to get to this benchmark of 600 outlets on highways?

00:40And are there any specific geographies you are targeting?

00:47So as you have seen that, you know, we have already built a product of lounges at the airport, right?

00:55And similarly, there are different services which we have added in our portfolio,

01:01which would be at the airport, which includes from the airport transfer to meet and assist to the spa.

01:08Now we are also getting into the retail and UTP at the airport.

01:12Similarly, we have also launched, you know, the railway lounges as well.

01:18So highway is one of the additional products, I would say.

01:23But however, compared to all our other services, you know, we are very bullish about this product altogether

01:32because we see that, you know, there's going to be a lot of attraction towards it.

01:37Yes, when we talk about 600 outlets, I would say that we are already in process.

01:43We have already signed almost around nearly around 400 outlets at the highway.

01:49And in the next couple of weeks, we should be having around 600 outlets in our portfolio.

01:55So this is where it is.

01:57Secondly, it's going to be in the same way, the way we have actually offered these benefits to our credit card holders

02:06and also to the enterprises.

02:08So the focus is going to be of adding additional services because we see that

02:13and we also understood the pulse of our customers at the airport.

02:18So I think that is helping us to build the other services.

02:22All right, Ms. Kalath, Mahima also joining in.

02:25You know, I want to understand that when you say you already have 400 outlets signed,

02:30how are you carrying this out?

02:32Is it going to be an asset light approach or are you actually buying one of these stores?

02:38How is it going to happen?

02:39And if you're buying, what is the kind of capex that you're infusing?

02:43So Mahima, as you're aware that, you know, our business model is an asset line

02:50and we will continue doing the same.

02:52So the way we have actually partnered with the other operators and the brands,

02:57similarly, the highway is also going to be in the similar model,

03:01wherein we are not going to invest in actually having our own outlets.

03:07I would say that it is not never, but right now, yes, that is not the plan.

03:14And we are more focusing on building our technology and, you know,

03:19installing our technology in all these places.

03:22So that is where our investment would be.

03:24And it would be a similar model, which is called the asset light model.

03:29All right. So how much capex, if any, in this?

03:34To be very frank enough, you know, there is nothing as capex.

03:38It is just our four terminals, which would be deployed there,

03:43which would be a minimal investment.

03:46Understood. And what's the kind of contribution you expect from this business

03:50as it scales from 400 currently to 600?

03:55I think, I mean, any service which is, you know, introduced in the market,

04:01it takes time because even if you have seen the airport lounges, you know,

04:06I mean, now it's been 12 years we have actually started this business.

04:12And if you actually see the awareness has taken a couple of years,

04:16and now people are aware that there is a product of the lounge at the airport

04:20and, you know, people are taking the credit card for using the lounges at the airport.

04:26Similarly, I would say that, you know, even at the highway, it would not be immediate.

04:31It would take some time.

04:33But I would say that, you know, because the awareness has grown so much

04:36in terms of the benefits which are being provided,

04:39so I would say in the next one or two, I mean, in the next two years,

04:43we would say that, you know, these services would contribute around 20%

04:47to our portfolio, to our top line, actually.

04:50All right. And do you expect break-even also to happen in the next two years?

04:55Absolutely. I mean, our business model has always been such that, you know,

04:59that we always try and ensure that, you know, from the immediate effect,

05:04it is profitable and there is no loss.

05:08And most importantly, let me clarify, that the other services,

05:13whichever we are introducing, would be at a higher margin

05:16compared to our ongoing lounge product.

05:20So then your margins are currently at 7%, but what you've guided for is

05:24that your margins will be anywhere between 7% to 9%.

05:27So do you see an upside to that 9% also from a long-term perspective,

05:31you know, adding these additional services that you'll be offering?

05:35May I just to actually correct you?

05:38The gross margins are around 11% to 13% right now.

05:42The EBITDA is around 7% to 9%.

05:45And yes, we will continue doing the same, whatever, you know,

05:49we have actually given the protection.

05:51I'm talking about the EBITDA margins only.

05:53So EBITDA margins will remain within that range of 7% to 9%

05:56Do you see an upside from that 9% going forward?

05:58I would like to give the same guidance right now.

06:02Alright. And in terms of, you know, you've added six new airport lounges,

06:06you know, this quarter. In FY25, what's your overall aim?

06:10How many lounges will you be adding?

06:13See, as and when there are new airports coming up, I mean,

06:16I would say that, you know, the privatization of airports happening,

06:19the more and more lounges coming up in these places,

06:23not only in the new airports, I would say even the existing airports,

06:27which are in tier two and tier three, you know,

06:31there is a plan of lounges coming up.

06:34So I would say that, you know, right now we have around 62 lounges across India.

06:41And I would say FY25, that would be the number.

06:48But going forward, we would say that, you know,

06:50it would increase to around 75 in a year's time.

06:55Alright. Ma'am, if I can try and for viewer context, get your take.

07:01Margins have contracted at least over the last couple of years.

07:05Talk us through what has led to that contraction.

07:08You don't suggest that there's going to be an increase even as some of your,

07:13some of your new, you know, outlets start to mature.

07:19So what exactly is happening here in your viewpoint?

07:23Why the margin contraction just for viewer context?

07:27So I would say that, you know, there are a couple of reasons.

07:29And I think we have actually, you know, given, you know,

07:33the reasoning as well in our couple of earning calls as well.

07:38Stating that, you know, there are a few, I would say,

07:42changes at the airport and in terms of their, you know,

07:46their maintenance or I would say the fees, which were changing there.

07:53So I would say that the change or the shift,

07:56which was happening from the airport authority to the privatization.

08:01So I would say that the private airports were actually trying to, you know,

08:06get into getting a similar or getting into a price renovation

08:11or the price delivered at that end.

08:14So the float price was actually getting seen and that was one of the change

08:18which happened that impacted the gross margin.

08:21And I would say that, yes, all our other services,

08:25which I also told you that, you know, would be at a higher margin.

08:28And these would actually contribute to our, you know,

08:34I would say gross margin and the EBITDA getting better in a couple of years.

08:39All right. And ma'am, what should the,

08:43how much should we expect an improvement both in terms of gross margins as well

08:47as EBITDA.

08:48Can we expect a hundred basis points from these new ventures that you're

08:52embarking on?

08:54So I would like to give the same guidance, which I had given in the past.

08:58I would continue saying that, you know,

08:59the gross margin would be at 11 to 13% and the EBITDA would remain between

09:0479%. So for now we will give the same guidance.

09:08All right. Thank you so much, ma'am.

09:10It's been a pleasure speaking with you and getting that perspective.

DreamFolks Q1: Revenue And Net Profit Take A Upswing | NDTV Profit

Category

Transcript

Recommended