Travel Food Services Ltd l Gateway to India’s Aviation-Led Consumption Story - Initiating coverage

We initiate coverage on Travel Food Services (TFS) with a BUY rating and a target price of Rs 1,670. Backed by global expertise of SSP Group and the local execution capabilities of K Hospitality, TFS is a leading integrated airport F&B and hospitality platform in India operating across 494 Travel QSR and 37 airport lounges spanning 19 airports in India, Malaysia, and Hong Kong. TFS is well positioned to capitalize on India’s aviation upcycle, supported by 30+ new airports expected by FY29E and sustained passenger traffic growth. Its strategic partnerships with key airport operators provide strong concession visibility and access to marquee locations is an added positive. We expect TFS to deliver ~20% system-wide revenue CAGR over FY25–FY28E, driven by network expansion, new concession wins, and rising passenger spend. This, coupled with JV profits, is likely to drive ~15% PAT CAGR / ~29% ROE by FY28E, supporting strong and sustainable earnings.

Airport Expansion & Passenger Growth to Drive Structural Upside:

India’s aviation sector is in a multi-year upcycle, with operational airports increasing from 77 (FY16) to ~163 currently operational and a further 30–50 airports expected by FY29e. New greenfield airports and ongoing terminal expansions are enhancing commercial space per passenger, supporting higher F&B monetization. Passenger traffic is projected to grow at ~9-10% (domestic) and ~7–9% (international) CAGR over the medium term, providing sustained demand tailwinds. Given its entrenched presence across leading airport operators, TFS is well positioned to capture incremental traffic growth while benefiting from premiumization trends, supported by operating leverage across its network.

Scale, Brand Portfolio & Dual-Format Model Strengthen Competitive Positioning:

TFS is India’s leading integrated airport F&B platform, with ~26% market share in Travel QSR and ~45% in airport lounges (FY25, CRISIL). The company has delivered ~80% revenue CAGR over FY21–FY25, significantly outpacing passenger traffic growth. Its dual-format model (Travel QSR + lounges) enables monetization across customer segments, enhancing revenue per traveler. With operations across 19 airports (15 India, 4 international), TFS benefits from scale, geographic diversification, and strong operator relationships, reflected in a ~94% contract retention rate. Its ability to operate within a highly regulated and complex airport ecosystem creates high entry barriers and increases switching costs, further reinforced by its scale (494 outlets, 140 brands) and strong promoter backing—SSP Group (global expertise) and K Hospitality (local execution)—supporting superior execution, margin efficiency, and growth.

Strategic JVs with AAHL & GMR Strengthen Growth Visibility:

TFS is deeply embedded within India’s private airport ecosystem through its JVs with Adani Airport Holdings (AAHL) and GMR, which together account for ~50% of India’s passenger traffic (H1FY26, CRISIL). This partnership-driven approach extends TFS’s growth visibility, as expansions and new airports within partner networks provide a consistent pipeline to add and scale outlets and lounges. While F&B concessions continue to be awarded through competitive bidding, TFS’s partnerships with airport operators place it in a stronger position within this framework. Being embedded in the ecosystem provides early visibility into upcoming opportunities, a better understanding of operator expectations, and an established execution track record within the same network, which improves its chances of winning. The JV-led approach also expands TFS’s addressable revenue base at a portfolio level, supported by scale benefits across the network. With incremental capacity from developments such as Navi Mumbai, continued contract wins, and asset migration within the AAHL platform, we expect ~20% system-wide revenue CAGR, supported by a combination of passenger growth, network expansion, and improving spend per passenger.

Valuation, view & Key risks:

TFS trades at ~36x/31x FY27E/FY28E earnings, which we view as reasonable given its exposure to India’s aviation upcycle, strong entry barriers, and superior return profile (~29% ROE by FY28E). We value the company at 40x P/E (2.5x PEG), arriving at a target price of Rs. 1,670. Key risks – Inability to secure new concession agreements, non-renewal of existing airport contracts, slowdown in consumer spending.

Company website: https://www.travelfoodservices.com/

Click to download the full Travel Food Services Ltd. IC Report

Analyst:

• Rahul Dani - Research Analyst, Institutional Equities (NISM-201500034725)
• Aachal Pal - Research Associate, Institutional Equities (NISM-202300215737)

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FAQs on Travel Food Services - Initiating Coverage Report

What drives growth for Travel Food Services?

Rising air passenger traffic, airport expansion, premiumization, and strong concession partnerships drive consistent growth.

What is the company’s competitive advantage?

Its dual-format model, strong brand portfolio, global-local partnerships, and high entry barriers within airport ecosystems provide a competitive edge.

What is the financial outlook?

The company is expected to deliver ~20% revenue CAGR and strong return ratios, supported by network expansion and operating leverage.

What are the key risks?

Risks include concession renewal uncertainties, slower passenger growth, and potential weakness in discretionary consumer spending.

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