Dreamfolks shares hit 5% lower circuit after closing domestic airport lounge services

On Wednesday, the DreamFolks shares are down by 5 percent and hit a lower circuit price of Rs 131.07 per share on NSE after the exchange filing on September 16, 2025, revealed that it has formally discontinued its domestic airport lounge business. The company, widely known for aggregating airport lounge access for major banks and card networks, cited that this move has a material impact, which is likely to reshape its revenue structure and relationships with key clients. While DreamFolks will continue its global lounge offerings and other domestic services, it is the end of its core domestic lounge business.

This decision comes after a year marked by major disruptions in lounge access across the Indian airport ecosystem. The chain of events began in 2024, when several airport lounge networks experienced outages and operational incidents, most notably in Mumbai, that temporarily cut off DreamFolks-powered access for bank customers. Faced with such breakdowns and growing technology demands, major airport operators like Adani Airports and GMR Group began to question the need for intermediaries. They started directly negotiating access with banks and card issuers, thus controlling the tech and payment infrastructure themselves. Travel Food Services, another dominant lounge operator, similarly shifted to building proprietary access systems and launched its own EliteAssist product suite, further accelerating the downward trend.

This move by operators led to a cascade of client exits for DreamFolks. Axis Bank and ICICI Bank, two of India’s largest credit card issuers and historically significant clients for DreamFolks, were among the first to sever ties and migrate lounge programs to these new platforms by mid-2025. In the lead-up to the discontinuation, Adani Digital, Semolina Kitchens (Adani Airports' hospitality arm), Encalm (linked to GMR airports), and Travel Food Services all issued termination notices, effectively pulling out their lounges from the DreamFolks ecosystem and reducing DreamFolks' addressable domestic network. Other networks, such as Visa, RuPay, and SBI Card, remained temporarily, but many had begun shifting to alternative providers or were impacted by the development.

Despite these setbacks, DreamFolks reported relatively strong numbers in Q1FY26, the last full quarter before the fall of its dominant vertical. The company posted revenue of Rs 349 crore, rising 8.8 percent year-on-year, with gross profit up 24 percent to Rs 46.6 crore and profit after tax jumping 24 percent to Rs 21.3 crore, all pointing to improved operational efficiency and positive momentum. Margins also expanded, with gross margin at 13.3 percent and PAT margin reaching 6.1 percent for the period. Management highlighted efforts at client diversification: over 40 new enterprise clients were onboarded in FY25 across travel, lifestyle, and technology, but the company has acknowledged that non-lounge and global offerings are not yet sufficient to offset the expected decline in core revenues.

The rapid shift by airport operators to cut out aggregators and offer direct access has made DreamFolks’ business model obsolete in its original form, dealing a swift blow to its market capitalization. The company’s shares have already lost about 74 percent in the past year. As the company seeks to reposition, it is in talks with clients to offer alternative lifestyle and travel benefits, and to grow its non-lounge and international business units. This development serves as a wake-up call for firms that act mainly as intermediaries in supply chains: sudden business model disruptions, when clients choose to bypass aggregators, can rapidly undermine revenue visibility and brand positioning, thus denting investor confidence and raising doubts about future growth trajectories.