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Zaggle Prepaid Ocean Services IPO opens today: Should you subscribe to the issue?

Zaggle Prepaid Ocean Services IPO opens today: Should you subscribe to the issue?

Incorporated in 2011, Zaggle Prepaid Ocean Services provides financial technology products and services to manage corporate business expenses through automated and innovative workflows.

Pawan Kumar Nahar
Pawan Kumar Nahar
  • Updated Sep 14, 2023 3:37 PM IST
Zaggle Prepaid Ocean Services IPO opens today: Should you subscribe to the issue?The company intends to raise more than Rs 563 crore, which includes a fresh share sale of Rs 392 crore and OFS of up to 1.04 crore equity shares by its promoters and existing shareholders.
SUMMARY
  • Zaggle Prepaid Ocean Services to open between Sept 14-18.
  • Price Band fixed at Rs 156-164 apiece, lot size of 90 shares.
  • Issue size likely to be over Rs 563 crore, listing at BSE & NSE.

The Rs 563.38 crore initial public offering (IPO) of Zaggle Prepaid Ocean Services kicks off for subscription on Thursday, September 14 and the three-day bidding will conclude on Monday, September 18. The fintech player will be selling its shares in the range of Rs 156-164 apiece with a lot size of 90 equity shares and its multiples thereof. Incorporated in 2011, Zaggle Prepaid Ocean Services provides financial technology (fintech) products and services to manage corporate business expenses through automated and innovative workflows. As of FY 2023, it had seven offices across India, more than 1,750 customers, and over 1.7 million end users. The IPO includes a fresh share sale of Rs 392 crore and offer for sale (OFS) of up to 1.04 crore equity shares by its promoters- Raj P Narayanam and Avinash Ramesh Gokhindi- and shareholders including VenturEast Proactive Funds LLC, GKFF Ventures, VenturEast SEDCO Proactive Fund LLC, VentureEast Trustee Company, Zuzu Software Services and Koteswara Rao Muderi. Ahead of its IPO, the company undertook a pre-IPO placement of 44.51 lakh equity shares at a price of Rs 164 per shares aggregating to Rs 73 crore on August 16 and a similar placement of 15.24 lakh equity shares at same price amounting to Rs 25 crore on August 21. This has reduced the size of fresh issues in the offering. The company intends to utilize the net proceeds from the issue towards expenditure towards customer acquisition and retention; expenditure towards the development of technology and product; repayment or pre-payment of certain borrowings; and general corporate purposes. However, funds from offer-for-sale shall go to selling shareholders of the company. Zaggle Prepaid offers fintech and SaaS products and services to corporates working in the fields of banking and finance, technology, healthcare, manufacturing, FMCG, infrastructure, and automobile industries. Zaggle Prepaid Ocean Services' clientele includes TATA Steel, Persistent Systems, Vitech, Inox, Pitney Bowes, Wockhardt, MAZDA, RP Sanjiv Goenka Group and among others. Zaggle Prepaid Ocean Services raised Rs 253.52 crore by allocating 1,54,58,515 equity shares at a issue price of Rs 164 per share to 23 anchor investors including Morgan Stanley Asia, Matthews Asia Funds, Neuberger Berman Emerging Markets, Eastspring Investments India Fund, Astorne Capital VCC, Copthall Mauritius Investment, Societe Generale, and Goldman Sachs and more. Brokerage firms are not very positive on the issue and have flagged the aggressive valuations and highly competetive nature of the business as the key risks and . Also, over dependence on select clients and inability to attract new customers may dampen the prospects further, they said. However, some have suggested to bid for the issue with a word of caution. "Zaggle has demonstrated growth at a CAGR of approximately 51.9 per cent during the three years- FY 21-23, driven by increased usage of digital modes of payment in India. If we attribute FY23 earnings to the post-IPO fully diluted paid-up equity capital of the company, the asking price is at a P/E of 66.7 times and we believe it to be priced aggressively," said StoxBox with an 'avoid' rating. Several factors contribute to its appeal, including a diverse client base spanning various industry, consistent revenue growth over the years, the company's expansion strategies, a diversified revenue model, and the flourishing digital payments sector. Given these, we recommend a 'Subscribe' rating for the issue on a short- to medium-term basis, said Geojit Financial Services. The company has reserved 75 per cent of the net offer for qualified institutional bidders (QIBs), while non-institutional investors (NIIs) will get 15 per cent of the offering. Remaining 10 per cent of the offer shall go to retail investors. Zaggle has integrated a comprehensive array of features into a single platform, making it one of the most feature-rich solutions for customers. The company has shown tremendous growth in its top line. With the launch of its new platform ‘Zoyer’ and constant endeavour to increase its customer base, the company has a positive outlook, said Choice Broking in its IPO note. "According to the company’s RHP, there are no other publicly listed firms, both in India and abroad, that engage in a business similar to that of Zaggle. However, the company’s P/E multiple at a higher price band, after adjusting for post-IPO fully diluted paid-up equity, comes out to 87.4 times, which seems to be aggressively priced," it added with a 'subscribe with a caution' rating.

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ICICI Securities, Equirus Capital, IIFL Securities and JM Financial are the book-running managers to the issue, while Kfin Technologies has been appointed as the registrar to the issue. Shares of the company are likely to be listed on both BSE and NSE.Disclaimer: Under no circumstances should any person at this platform make trading decisions based solely on the information discussed herein. You should consult a qualified broker or other financial advisor prior to making any actual investment or trading decisions. All information is for educational and informational use only. Business Today does not guarantee, vouch for, endorse any of its contents and hereby disclaims all warranties, express or implied, relating to the same.

Also read: Stocks that share market analysts recommended on September 14, 2023: Apollo Pipes, Bharat Forge, Bajaj Finance and Star Health

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Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
Published on: Sep 14, 2023 10:23 AM IST
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