The shares of Travel Food Services jumped around 6 percent on November 27 after ICICI Securities initiated coverage on the newly-listed stock with a 'Buy' rating, and a target price implying strong upside potential from current levels.
The shares of the company hit a fresh 52-week high of Rs 1,445 apiece. The stock later erased all gains and was trading in the red with marginal losses in the afternoon.
ICICI Securities on Travel Food Services:
ICICI Securities assigned a target price of Rs 1,600 per share for Travel Food Services, implying an upside potential of more than 17 percent from the stock's previous closing price of Rs 1,364.10 apiece.
The domestic brokerage said that the company backed by experienced promoters and a global travel F&B major, SSP Group. The company, which is India's leading travel F&B player, operates in the highly regulated and high entry-barrier airport segment.
Given the firm's strong contract retention and win trajectory of more than 90 percent, and India's growing airport footprint and passenger traffic, ICICI Securities sees Travel Food Services delivering a 21 percent system-wide revenue CAGR over FY25-28.
The brokerage added that the company’s strategic partnerships with Adani Group and GMR Airports will enhance its growth visibility. "We expect scale to improve its ability to win future concessions at other airports. With TFS’ leading position in airport QSR and lounges, 24x7 operations and low capex intensity, it should deliver strong profitability/RoCE of ~38%/~25%+ over FY26-28E," it added.
"Given the combination of scale, favourable pricing, and assetlight concession model, TFS is expected to maintain healthy EBITDA margins of 37-38% over FY26–28E and strong RoCE of 25%+ over the long term. We expect very marginal margin expansion over FY26–28E driven by lounge mix, operating leverage and continued cost discipline," ICICI Securities further said.
Travel Food Services share price history:
Travel Food Services shares were trading around 0.62 percent lower at Rs 1,355.60 apiece, as seen at 3 pm. The stock has gained around 4 percent in the past five days, and over 26 percent in the past six months.
The shares had made a tepid market debut in July this year, listing at a premium of just over 2 percent against the IPO price at Rs 1,125 apiece. The Rs 2,000-crore initial public offering (IPO) was open for subscription from July 7 to 9, and was subscribed 2.88 times in the price band of Rs 1,045 to Rs 1,100 per share.
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