DreamFolks Shares Hit Lower Circuit Following Shutdown Of Domestic Lounge Operations

Shares of DreamFolks have hit a lower circuit in trade on Wednesday, with cuts of 5%. This comes after the company announced it has shut down its domestic airport lounge services business - a key revenue generator.

This adds to investors' woes in DreamFolks, whose shares have fallen almost 67% on a year-to-date basis.

The pressure in DreamFolks' stock has been fomenting for quite some time now.

It started when airport operators and service providers started to realise they can directly negotiate with banks, card issuers without having to rely on a middleman like DreamFolks.

The cracks started appearing when these airport operators and card issuers eventually started breaking their ties with DreamFolks.

Most recently, Travel Food Services Ltd. terminated its contract with DreamFolks, citing failed negotiations.

Earlier, operators such as Adani Airport Holdings Ltd. as well as banks like ICICI Bank, Axis Bank moved away from their ties with DreamFolks.

TFS was perhaps the last nail in the coffin for DreamFolks, especially considering the fact that Adani Airports, TFS and GMR Airports Ltd account for nearly 80-85% of domestic airport traffic.

Losing access to such a network meant DreamFolks had no option but to cease their operations in the domestic airport lounge services business, which accounted for 77% of the company's revenue.

DreamFolks has announced that it will continue to operate lounges in the international market, a vertical that contributed 23% to the company's overall revenue.

In addition, DreamFolks also confirmed that it will continue other domestic services. The company is also in talks with existing clients regarding alternate value propositions.