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Investing.com -- SSP Group Plc’s (LON:SSPG) stock jumped over 8% on Wednesday following confirmation that its Indian joint venture, Travel Food Services (TFS), will proceed with an initial public offering.
The listing and commencement of trading on the Indian stock exchange is set for July 14.
The IPO price band for TFS has been set at 1,045-1,100 indian rupees per share, implying a market capitalization between £1.17 billion and £1.23 billion.
This corresponds to a price-to-earnings ratio of 38–40x based on projected net income for the fiscal year ended March 2025, at the upper end of valuation expectations for the business.
SSP Group, which currently holds a 49% stake in TFS, is not divesting any shares in the IPO.
Instead, it plans to acquire an additional 1.01% interest for approximately £12.5 million, taking its total stake to 50.01%.
This move secures majority ownership, enabling SSP to continue consolidating TFS’s financials into its group accounts.
According to Morgan Stanley (NYSE:MS), TFS generated net income of £32.5 million for the year ended March 2025.
In comparison, SSP’s FY24 (September year-end) non-controlling interest (NCI) charge, excluding one-off items, was £25 million, reflecting its 49% stake in the venture.
The IPO valuation suggests TFS accounts for approximately 42-44% of SSP Group’s total market capitalization, while contributing only 15-20% of the group’s underlying earnings last year.
This discrepancy indicates a potential rerating of SSP’s remaining operations. Based on the IPO valuation, the market-implied P/E multiple for SSP’s non-TFS business could decline from 14x to around 10x, assuming share prices remain stable.
Under Indian securities regulations, both SSP and its joint venture partner, the Kapur Family Trust, are subject to a mandatory lock-up period.
They must retain their entire shareholding for at least six months post-listing and continue to collectively hold a minimum of 20% of TFS for at least 18 months.
Additionally, TFS is required to achieve a minimum 25% public float within three years of its listing.
The IPO strengthens TFS’s financial profile and visibility as a standalone public company, while also reinforcing SSP’s strategic commitment to high-growth markets.
The Indian travel food and beverage sector has demonstrated strong recovery and expansion following the pandemic, and TFS has been a key contributor to SSP’s international growth trajectory.
The move also provides a transparent market benchmark for TFS’s valuation, enhancing clarity around its contribution to SSP’s portfolio.
Analysts expect the listing to attract strong interest given the scarcity of listed peers in India’s travel retail F&B space.
The TFS IPO is expected to catalyze revaluation for both the unit and its parent company, positioning SSP to leverage its strengthened stake for long-term strategic and financial advantage.