Buy DreamFolks; target of Rs 140: Motilal Oswal

Motilal Oswal's research report on DreamFolks

DreamFolks (DFS) posted a sharp revenue decline of 41% QoQ / 35% YoY to INR2.0b in 2QFY26, reflecting the significant disruption following the suspension of domestic lounge services (~90% of revenue). EBITDA was down 56% QoQ/48% YoY to INR120m, and EBITDA margin contracted to 5.8% (-190bp QoQ/-150bp YoY). Consolidated PAT stood at INR112m, declining 30% YoY and 47% QoQ, with a 5.5% margin. For 1HFY26, DFS’s revenue/EBITDA declined 13.0%/15.0% YoY. We expect its revenue/EBITDA to dip 49.0%/7.0% YoY in 2HFY26.

Outlook

We value DFS at INR140 per share (14% potential upside), based on 11x FY27E EPS. Reiterate BUY.