The ₹2,000-crore public issue of Travel Food Services (TFS), a leading player in India’s travel quick service restaurant (QSR) and lounge services, will be open July 7-9.
This is entirely an offer-for-sale of 1.82 crore shares by Kapur Family Trust, which also owns the iconic Copper Chimney brand through its flagship entity, K Hospitality. Post-issue, the total promoter shareholding in TFS will fall to 86.2 per cent. The other promoter, the UK-headquartered global travel F&B player SSP Group plc (pre-issue: 49 per cent stake) isn’t diluting its stake.
At the upper end of the IPO price band of ₹1,100, TFS will be valued at ₹14,484 crore, translating into a FY25 P/E multiple of 39.9 times.
At first glance, the valuation looks attractive, especially compared to listed high-street QSR players like Jubilant Foodworks, Devyani International, Westlife Foodworld, Sapphire Foods and Restaurant Brands Asia, which trade at far steeper P/E multiples (in excess of 150x). TFS’ lower valuation likely reflects its airport-concession-dependent model, contract renewal risk, and a different business mix by combining airport lounges with transit food and beverages (F&B), rather than delivery-driven, brand-loyalty-led formats.
That said, the sharp valuation gap suggests TFS could be a long-term winner and a unique play in the QSR space if it maintains growth and retains contracts. We believe this IPO is investable, but for investors with a high-risk appetite. Investors will need to periodically monitor certain business risks as explained below.
Business overview
According to a CRISIL report, TFS operates India’s largest network of airport travel QSRs and lounges. As of FY25, the company had 442 QSR outlets, comprising 90 partner and 37 in-house brands, across India and Malaysia. It has 37 ‘Araya’ lounges across India, Malaysia and Hong Kong. Overall, it is present in 18 airports as of March 2025.
TFS operates through concession, lease, licence and tenancy agreements with airport and highway operators. As of FY25-end, it had 70 such airport concessions across India, Malaysia and Hong Kong. Recently, TFS signed a letter of intent with SSP Asia Pacific Holdings, under which TFS will lead lounge expansion across West Asia, South-East Asia, and Africa (excluding Egypt), while SSP will focus on Europe, North America and Australasia.
As a travel QSR player with a domestic market share of 26 per cent, TFS sits within the broader-listed QSR stock space dominated by high-street names. Its lounge business, with India market share of 45 per cent and a segment from which TFS derives 45 per cent of operational revenue, is not entirely comparable to airport service aggregator Dreamfolks (75 lounges in India), whose shares have taken a pounding in recent days due to pressure on its business.
Broadly, TFS has two main revenue streams. First, it runs QSRs, predominantly at airports (and a few highway locations). These outlets operate under a mix of in-house and franchised brands, including tie-ups with global QSR brands such as Subway, Pizza Hut, KFC. TFS’ airport travel QSR business was about 51 per cent of revenue from operations in FY25, and more than half of that pie was contributed by revenue from brand partners.
Second, TFS earns from managing airport lounges. It partners with airlines and card aggregators to provide access-based lounge services. It additionally earns through third-party service tie-ups inside lounges. Dreamfolks acts as a lounge access aggregator, connecting passengers with lounges it doesn’t own. TFS, on the other hand, operates and manages lounges directly, generating revenue from both footfall and ancillary services.
In FY25, TFS revenue from operations stood at ₹1,688 crore, a 21 per cent year-on-year increase from FY24, thanks to both better sales at old stores (+4.55 per cent) and new store openings (+15.66 per cent). The business has achieved operating scale in recent years, with FY25 adjusted EBITDA of ₹554 crore and margin of 32.8 per cent (double of high-street QSR peer average). PAT for the year was ₹380 crore, up 28 per cent year on year. Debt in balance sheet as of May 31, 2025, was ₹274 crore, which is quite manageable.
Being exposed to the same vagaries of QSR sector, how did TFS make more profits than all of the high-street QSR stocks combined? Despite modest average daily sales per outlet, TFS’ airport-based model wins due to premium pricing and minimal marketing spends, thanks to captive footfalls. Many of its outlets are lean-format kiosks or counters with low staffing needs and high-margin lounges contribute a stable, non-volatile revenue stream.
Business risks to monitor
Before taking the plunge, here are some key factors investors should keep in mind.
One, TFS does not own the premises it operates in. Its entire footprint, whether QSR counters or lounges, is governed by airport concession agreements, with an average tenure of 8.21 years and an average remaining life of 6.01 years as of FY25. About 20 per cent of its airport concessions are up for renewal over the next three years. TFS business is also highly concentrated, with the top five airports (Bengaluru, Chennai, Delhi, Kolkata and Mumbai) accounting for 85.9 per cent of FY25 revenue, with an average remaining concession life of just 3.47 years at these locations. This makes visibility of medium-term revenue reliant on continued wins.
Two, while TFS claims a contract retention rate of 93.94 per cent, future wins are not guaranteed. Concession awards depend on competitive bidding, evolving airport operator preferences and performance benchmarks. Any failure to renew key contracts, particularly at its top five airports, could lead to sharp revenue and margin hits.
Three, the lounge business relies heavily on card companies, lounge membership and airline programmes. Deactivation of certain programmes by partner banks (as seen in the case of Dreamfolks) could have material earnings impact. Airport operators can choose not to continue the lounge lease, as experienced by EIH in Mumbai airport which lost ₹120-crore annual business.
Four, the QSR formats within airports cater to semi-captive customers. This gives TFS the ability to command higher pricing but limits opportunities to build brand equity, repeat usage or upselling potential that peer QSR chains can tap into.
Five, the government-backed Udaan Yatri Café initiative, offering basic F&B items at extremely low prices (for example, tea at ₹10, samosa at ₹20) to airport travellers, poses a direct threat to TFS’ value perception and sales. A wider rollout across airports may dilute revenue from core QSRs.
Valuation
TFS offers investors exposure to an asset-light travel retail business that sits at the intersection of rising travel demand and growing consumer spend on convenience and premium experiences. The model appears profitable, operates with little debt and works at scale. Its leadership in airport lounges and food courts gives it a strong moat in a high footfall, low-competition environment. TFS could be seen as a proxy play for air traffic, given that 95 per cent of revenues comes from airports.
TFS is targeting airports in Asia-Pacific and West Asia to drive the next leg of growth in its lounge business. While its highway QSR segment is still in early stages, the Centre’s push for rapid highway expansion and NHAI’s mandate on wayside amenities present a promising long-term growth avenue.
At under 40 times FY25 earnings and with a strong operating track record, TFS appears priced attractively relative to traditional QSR peers in India. Globally, similar businesses like Compass Group and SSP Group, both listed in London, trade at around 40-46 times trailing P/E. As airport and expressway infrastructure expands and footfalls continue to rise in the long term, TFS stands to gain from operating leverage and the structural tailwinds. Given the positioning and risk-reward balance, investors with a high-risk appetite and a three-five year view can consider subscribing to the IPO.
Published on July 5, 2025
