Travel Food Services IPO: Analyzing the Market Sentiment and Future Prospects

Last Updated: July 09, 2025, 15:36 IST

The initial public offering (IPO) of Travel Food Services Ltd is set to conclude today at 5 PM, but early indicators suggest a lukewarm reception from investors. With a grey market premium (GMP) of just 0.73%, the sentiment surrounding this IPO appears to be tepid, raising questions about its long-term viability and attractiveness to potential investors.

Overview of the IPO

Travel Food Services aims to raise ₹2,000 crore through its IPO, with a price band set between ₹1,045 and ₹1,100 per share. As of the latest data, the IPO has garnered a subscription rate of 2.65 times, with bids for 33,795,008 shares against the 12,742,199 shares available. However, participation levels vary significantly across investor categories: retail investors have subscribed at 0.60x, while non-institutional investors (NIIs) stand at 1.60x. The qualified institutional buyers (QIBs) have shown more interest, with a subscription rate of 7.04x.

Understanding the Grey Market Premium (GMP)

The grey market premium is a crucial indicator of investor sentiment, reflecting how much more investors are willing to pay for shares compared to the issue price. Currently, Travel Food Services’ GMP is at ₹8, translating to a mere 0.73% above the upper price band of ₹1,100. This flat listing expectation suggests that many investors are cautious, possibly due to broader market conditions or specific concerns about the company’s performance.

Company Background

Founded in 2007, Travel Food Services operates 397 quick service restaurants (QSRs) and airport lounges across 17 airports in India and Malaysia. The company boasts a diverse portfolio of 117 in-house and partner brands, including well-known names like KFC, Pizza Hut, and Subway. This extensive network positions TFS as a significant player in the airport-focused food services sector, which is expected to grow alongside the aviation industry.

Subscription and Allotment Details

The basis of allotment for the Travel Food Services IPO will be finalized on July 10, with the listing scheduled for July 14 on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Investors looking to participate must apply for a minimum of 13 shares, requiring a capital outlay of approximately ₹13,585 at the upper price band.

Analyst Recommendations

Despite the current low GMP, several brokerage firms have issued a ‘subscribe for long-term’ rating for the Travel Food Services IPO. Analysts point to the company’s strategic positioning within the airport food services market and its growth potential as key factors supporting this recommendation.

Positive Outlook from Brokerages

• SBI Securities highlights TFS as a “proxy to the Indian aviation growth story,” given its strong presence in major airport terminals. The firm notes that the stock is likely to trade at a discount compared to other listed QSR companies, making it an attractive investment at the upper price band.

• Canara Bank Securities emphasizes TFS’s competitive advantages, including global partnerships and high-traffic locations, suggesting that the IPO is priced attractively below sector averages.

• Arihant Capital Markets also supports a ‘subscribe’ rating, citing TFS’s operational efficiency and market leadership in airport QSRs and lounges. The ongoing expansion in domestic and international airports is expected to drive sustained revenue growth.

Financial Metrics and Valuation

At the upper price band of ₹1,100, the IPO is valued at a price-to-earnings (P/E) ratio of 39.9 times based on FY25 earnings. This valuation is considered competitive compared to other listed QSR companies, which could make TFS an appealing option for long-term investors.

Conclusion

While the Travel Food Services IPO has seen a modest subscription rate and a low GMP, the underlying fundamentals and growth potential of the company present a compelling case for long-term investment. As the aviation sector continues to expand, TFS is well-positioned to capitalize on the increasing demand for food services at airports. Investors should weigh the current market sentiment against the company’s growth prospects before making a decision.

In summary, while immediate interest may be subdued, the strategic advantages and market positioning of Travel Food Services could yield positive returns in the long run.