Raspberry Pi 3B, 3B+, 2B v1.2 and 4 (bootloader modification needed) are able to boot from wired network, thus possibly eliminates the need for an SD card. The process of setting up dnsmasq to provide DHCP service to network boot a Raspberry Pi is already documented here. But when your LAN is already using DHCP server program from ISC to allocate IPs for hosts, how do you configure it to boot a Raspberry Pi as dnsmasq does?

By capturing the DHCP packets from dnsmasq, I could determine the configuration that must to be added to /etc/dhcp/dhcpd.conf to achieve the same DHCP reply:

...
option space RPi code width 1 length width 1;
option RPi.discovery code 6 = unsigned integer 8;
option RPi.menu-prompt code 10 = text;
option RPi.menu-item code 9 = text;
group {
  vendor-option-space RPi;
  option RPi.discovery 3;
  option RPi.menu-prompt "PXE";
  option RPi.menu-item "Raspberry Pi Boot";

  option routers <IP of the gateway>;
  next-server <IP of the TFTP server>;

  host rpi-1 {
    hardware ethernet b8:27:eb:xx:xx:xx;
    fixed-address 192.168.1.140;
  }
}
...

However, dnsmasq still need to be running to provide TFTP service. It just needs to have DHCP functionality disabled or it will fail to start due to isc-dhcp-server already listening on UDP port 53:

/etc/dnsmasq.conf:

port=0
enable-tftp
tftp-root=/srv/raspberrypi/boot
interface=eth1