Travel Food Services IPO Day 2: Check subscription status, revised GMP & allotment date

The initial public offering (IPO) of Travel Food Services commenced on Monday, July 7, receiving a muted response on the first day's bidding, with a subscription rate of just over 11 per cent from all investor categories. The company targets a raise of Rs 2,000 crore by offering shares in a price band of Rs 1,045 to Rs 1,100 through an offer-for-sale (OFS) of up to 1,81,81,818 equity shares.

Investors can apply with a minimum of 13 shares per lot. The IPO, managed by Kotak Mahindra Capital Company, includes key dates such as the anticipated allotment date of July 14 and a tentative listing date on BSE and NSE shortly thereafter.

According to the data, the investors made bids for 30,47,473 equity shares, or 23 per cent, compared to the 1,34,12,842 equity shares offered for the subscription by 3.30 pm on Tuesday, July 08, 2025. The bidding for the issue shall conclude on Wednesday, July 09.

The allocation for retail investors was subscribed 27 per cent, while the portion reserved for non-institutional investors (NIIs) saw a subscription of  19 per cent. Allocation of employees was booked 70 per cent. However, the quota set aside for qualified institutional bidders (QIBs) was booked 18 per cent of the same time.

The IPO's principal objective is to enable an OFS by the promoters. Travel Food Services, established in 2007, operates quick service restaurants and lounges at 14 airports in India and 3 in Malaysia. As of June 2024, the company manages 397 Travel QSRs supported by a portfolio of 117 brands.

Travel Food Services boasts a solid financial performance, remaining debt-free with positive cash flow. Analysts have a favourable outlook on the company due to its robust promoter background and market share, notwithstanding the IPO's complete OFS structure and risks such as competition from Udaan Yatri café.

The grey market premium (GMP) for Travel Food Services' IPO has declined to Rs 12 per share, suggesting a modest 1 per cent potential listing gain. This marks a significant drop from Rs 90 when the price band was initially announced.

Market experts advise considering the IPO for long-term investment due to the company's strong financial stability and growth prospects. However, potential risks include additional promoter stake sales, as reflected in the current GMP trends.

As a market leader in Travel QSR and airport lounges, and benefiting from a first-mover advantage, it is well-positioned for sustained growth. Increasing airport infrastructure, fleet expansions, and rising passenger arrivals will boost its QSR and lounge segments. The largely untapped road-based QSR market, supported by government-backed WSA site awards, offers further growth potential, said Arete Securities.

"With promoters like SSP providing global expertise and K Hospitality's established reputation and cost efficiencies, this zero-debt entity is primed for success. Valued at an FY25 EV/Ebitda of 16.58 times, it shows strong growth prospects in the coming years. We recommend 'subscribe' for long-term investors," he said.

Prior to the IPO, the company secured Rs 599 crore from 33 anchor investors by allocating 54,43,635 shares at Rs 1,100 each. The IPO is structured with a 50 per cent reservation for qualified institutional buyers (QIBs), while non-institutional investors (NIIs) and retail investors are allocated 15 per cent and 35 per cent respectively. Rs 4.4 crore worth of shares are reserved for eligible employees, with a discount of Rs 104 per share.

Post-allotment, shares are expected to be credited to investors' demat accounts promptly. Positioned as a significant player in the travel food service industry, the company capitalises on its strategic airport locations and diverse brand offerings.

Ajcon Global Services gave a 'subscribe' rating to the issue citing its expertise in managing F&B challenges in a complex and secure airport environment. Capabilities and processes allow for efficient execution and proven track record of long-term relationships with airport operators, promoting growth in Travel QSR and Lounge industries.

"We assign 'subscribe' rating to this IPO as the company is a leading player in the Travel QSR and Lounge sectors in Indian airports along with strong expertise in operating and handling the distinct challenges of F&B in the operationally complex and highly secure airport environment," said Marwadi Financial Services. "It is available at a reasonable valuation as compared to its peers."

Key dates for prospective investors include the IPO closure, scheduled for July 9, and the last date for UPI mandate confirmation, which is a day prior. Refunds will be processed post-allotment, with shares expected in demat accounts by July 14.