Rating Rationale
September 24, 2025 | Mumbai
Dreamfolks Services Limited
Ratings downgraded to 'Crisil BBB-/Stable/Crisil A3'; Removed from 'Watch Negative'
 
Rating Action
Total Bank Loan Facilities RatedRs.145 Crore
Long Term RatingCrisil BBB-/Stable (Downgraded from ‘Crisil BBB+’; Removed from 'Rating Watch with Negative Implications')
Short Term RatingCrisil A3 (Downgraded from ‘Crisil A2’; Removed from 'Rating Watch with Negative Implications')
Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings.
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

Crisil Ratings has removed its ratings on the bank facilities of Dreamfolks Services Ltd (Dreamfolks) from ‘Rating Watch with Negative Implications’ and downgraded the ratings to ‘Crisil BBB-/Crisil A3’ from 'Crisil BBB+/Crisil A2’ and assigned a ‘'Stable' outlook to the long-term rating. 

 

The ratings were placed on ‘Watch Negative’ on July 09, 2025, following the anticipated impact on the business amidst loss of some customer programmes from ICICI Bank Ltd and Axis Bank Ltd effective July 01, 2025. Crisil Ratings understand that the impact of the aforestated remains material, leading to reduced business inflow for the company during July’25 and Aug’25 and has subsequently resolved the ‘Watch’ status.

 

The rating downgrade reflects the expected weakening of Dreamfolks' business risk profile, primarily due to the discontinuation of its domestic lounge business, which accounted for approximately 93% of revenue in fiscal 2025, effective September 16, 2025. Although domestic lounge services are currently ongoing, the pace has significantly slowed and will further moderate gradually over the medium term. As a result, the impact on the scale of operations is expected to be substantial and will fall short of Crisil Rating's previous expectations of annual revenues ranging from Rs 1,400-1,600 crore over the medium term. While the company is likely to expand its presence in the global lounge and non-lounge services segment, the company's ability to scale up operations in these segments, given their lower contribution in revenue (estimated at around 7% in fiscal 2025), will be closely monitored. Operating profitability, which stood at approximately 7% in fiscal 2025, has moderated over the past couple of fiscals and is expected to remain a key rating sensitivity factor, particularly as the company plans to penetrate in other segments to incentivize volumes.

 

The rating continues to factor in the company's healthy financial risk profile and liquidity, characterized by nil debt, significant net worth, free liquid investment of Rs 89.77 crores and free cash and bank balances of Rs 30.7 crore as of March 2025. Given the asset-light business model and low fixed expenses (anticipated at around Rs 3-4 crore per month), Crisil Ratings believes that the company's financial risk profile is likely to remain strong over the medium term. However, any more-than-anticipated impact on business performance, which could further weaken the financial risk profile and liquidity, will be closely monitored.

 

The ratings continue to reflect the extensive experience of the promoters in the lounge aggregator industry and healthy financial risk profile. These strengths are partially offset by the discontinuation of domestic lounge business impacting business performance.

Analytical Approach

Crisil Ratings has evaluated the standalone business and financial risk profiles of Dreamfolks.

Key Rating Drivers - Strengths:

  • Extensive experience in the lounge aggregator industry: Dreamfolks has been engaged in the lounge aggregation business in India for over 13 years and has expanded its reach to over 114 countries across Asia, Middle East, and Europe. Over the last 3-4 years, the company has leveraged its expertise to offer access to lifestyle and travel related services as well. Through its partnerships with RedBeryl, Grey Wall, and VFS Global, the company offers access to global lounges, luxury social clubs, golf clubs, coffee at malls, spa-wellness, highway dining, travel assistance such as meet-and-assist, airport dining and cab transfer, railway lounges and others. The company's diversified business segments, combined with the promoter's extensive experience in the industry, will continue to be a significant advantage in navigating the challenges associated with the discontinuation of its domestic lounge business and further expansion into other segments.

 

  • Healthy financial risk profile: The financial risk profile should remain supported by the management’s stance of funding business requirement through internal accrual and available liquidity, leading to negligible reliance on external debt over the medium term. Networth stood at Rs 305 crore as on March 31, 2025, which is likely to strengthen further over the medium term. Despite likely reduction in scale and profit, amidst discontinuation of domestic lounge business, the capital structure should be comfortable amidst absence of any large, debt-funded capital expenditure (capex), given the asset-light model. Gearing is likely to be nil and total outside liabilities to adjusted networth ratio at less than one time over the medium term. Debt protection metrics, too, will remain robust due to nil debt.

 

Key Rating Drivers Weaknesses:

  • Discontinuation of domestic lounge business: Dreamfolks has discontinued its domestic lounge business, effective September 16, 2025. This business contributed approximately 93% of the company’s revenue in fiscal 2025. Suppliers such as TFS, Encalm Hospitality, Adani Digital, and Semolina Kitchens will be phased out over the second and third quarters of fiscal 2026 and the loss of key customer programmes from ICICI Bank and Axis Bank is already in effect from July 2025. This may further impact the overall scale of operations, which could significantly lag previously expected annual revenues of Rs 1,400-1,600 crore over the medium term. The global lounges and non-lounge services, which generated around 7% of revenue during fiscal 2025, are expected to grow exponentially and support the scale of operations. However, limited visibility and uncertainty on timely ramp up of new Customer Value Propositions (CVPs) to offer non-lounge services, to be launched by banks, remains a key monitorable. Steady revenue growth from the global lounge and non-lounge services amidst stable operating margin, remain key rating sensitivity factors

Liquidity: Adequate

Liquidity should be supported by ample surplus available in cash accrual and bank limit. Bank limit utilisation was minimal at 5.02% for the 12 months through August 2025. Cash accrual was estimated at Rs. 73-74 crore during fiscal 2025 and is likely to contract substantially over the medium term amidst closure of domestic lounge business. However, nil term debt repayments will ensure the deployment of excess cash accruals towards business growth and working capital requirements, as warranted. Current ratio was healthy at 2.00 times as on March 31, 2025. The company had free liquid investment of Rs 89.77 crores and free cash and bank balances of Rs 30.7 crore as of March 2025.

Outlook: Stable

Crisil Ratings believes the credit risk profile of Dreamfolks will remain supported by the extensive experience of the promoters in the lounge aggregation business with nil reliance on the external debt and healthy liquidity.

Rating sensitivity factors

Upward factors:

  • Sustained ramp in volumes on global lounge and other segments leading to revenue of Rs 300-400 crore while maintaining the operating profitability at 7-8%.
  • Sustenance of healthy financial risk profile amidst efficient working capital management

 

Downward factors:

  • Lower operating margin of 5%, and/or decline in revenue below Rs 100 crore, leading to lower net cash accrual
  • Stretch in working capital cycle leading to moderation in the financial risk profile, especially liquidity.

About the Company

Dreamfolks was incorporated in April 2008, by Mr Mukesh Yadav, Mr Dinesh Nagpal and Ms Liberatha Kallat. The Gurugram (Haryana)-based company is India's largest airport service aggregator platform. It provides services such as lounge access, food and beverages, spa, meet and assist, airport transfer, transit hotels/nap room access and baggage transfer. The clients include major card networks, banks, online travel agents, airlines and enterprises.

Key Financial Indicators

As on/for the period ended March 31

 

2025

2024

Operating income

Rs crore

1291.88

1,134.97

Reported profit after tax (PAT)

Rs crore

69.68

69.68

PAT margin

%

5.39

6.14

Adjusted debt/adjusted networth

Times

0.00

0.00

Interest coverage

Times

25.85

82.02

Any other information: Not applicable

Note on complexity levels of the rated instrument:
Crisil Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

Crisil Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the Crisil Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name Of Instrument Date Of Allotment Coupon Rate (%) Maturity Date Issue Size (Rs. Crore) Complexity Levels Rating Outstanding with Outlook
NA Fund-Based Facilities NA NA NA 130.00 NA Crisil BBB-/Stable
NA Non-Fund Based Limit NA NA NA 15.00 NA Crisil A3
Annexure - Rating History for last 3 Years
  Current 2025 (History) 2024  2023  2022  Start of 2022
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 130.0 Crisil BBB-/Stable 09-07-25 Crisil BBB+/Watch Negative 19-03-24 Crisil BBB+/Stable   -- 21-12-22 Crisil BBB/Positive Crisil BBB-/Stable
      -- 20-05-25 Crisil BBB+/Stable   --   --   -- --
      -- 12-05-25 Crisil BBB+/Stable   --   --   -- --
Non-Fund Based Facilities ST 15.0 Crisil A3 09-07-25 Crisil A2/Watch Negative   --   --   -- --
      -- 20-05-25 Crisil A2   --   --   -- --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Fund-Based Facilities 6 ICICI Bank Limited Crisil BBB-/Stable
Fund-Based Facilities 34 ICICI Bank Limited Crisil BBB-/Stable
Fund-Based Facilities 40 HDFC Bank Limited Crisil BBB-/Stable
Fund-Based Facilities 50 DBS Bank Limited Crisil BBB-/Stable
Non-Fund Based Limit 15 HDFC Bank Limited Crisil A3
Criteria Details
Links to related criteria
Basics of Ratings (including default recognition, assessing information adequacy)
Criteria for manufacturing, trading and corporate services sector (including approach for financial ratios)

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