Zaggle Prepaid IPO: Retail Investors Show Strong Demand; Latest Subscription Status, GMP

Fintech, Zaggle Prepaid Ocean Services witnessed a 19% subscription on Day 1 against the total size of its initial public offering (IPO) to the tune of Rs 563.4 crore. Retail investors were major bidders on the first day of the IPO. The proposed equity shares in the IPO will be listed on BSE and NSE. The company is a prominent player in the business-to-business-to-customer (B2B2C) segment.

As per the data on NSE, the IPO received cumulative bids of 36,84,060 equity shares, subscribing 19% of the offered size of 1,93,26,761 equity shares. The retail portion is subcribed by 87% of the allocated shares to the category, while non-institutional investors subscribed 11% of the reserved portion. However, qualified institutional buyers showed no response to the IPO.

Of the total IPO size, 75% of the shares are reserved for QIBs, while 15% is for NIIs, and the rest of the 10% is kept for RIIs.

Friday (September 15th) will be the second day of the IPO. Currently, the grey market premium of the IPO is at Rs 33 per share. As per TopShareBrokers, with a price band of 164.00, Zaggle Prepaid Ocean Services IPO's estimated listing price is ₹197 (cap price + today's GMP). The expected percentage gain/loss per share is 20.12%.

The company's 100% book-building IPO opened on September 14, and will be available for subscription till September 18. Subscriptions will not be allowed on September 16th and 17th due to the weekend holidays.

The IPO comprised Rs 392 crore worth of fresh issue of equity shares and offer for sale (OFS) aggregating to Rs 171.4 crore.

The price band of the IPO is fixed at Rs 156 apiece to Rs 164 having a face value of Re 1 each. The bid lot size is 90 Equity Shares and in multiples thereof.

Book-running lead managers for the IPO were -- ICICI Securities, Equirus Capital, IIFL Securities, and JM Financial. While KFin Technologies is the registrar.

Ahead of the IPO, on September 13, the company raised Rs 253.52 Crore from 23 anchor investors at the upper price band of Rs 164 per equity share. Prominent Institutional investors included domestic mutual funds like LIC MF, ICICI MF, Kotak MF and international funds like Morgan Stanley Asia(Singapore), Societe Generale, Goldman Sachs (Singapore) Pte.

In addition, marquee investors such as East Spring, Abakkus, MK ventures (Madhu Kela), Ashish Kacholia, IIFL, Valuequest, Loomis and Mathews Asia participated in the anchor book process.

The company plans to utilise the proceeds of the fresh issue for customer acquisition and retention, technology and product development (₹40cr) from FY24 to FY26, and debt repayment (₹17.1cr). The remaining funds will be allocated for general corporate purposes.

Should you subscribe to the IPO?

As per Geojit's note, at the upper price band of ₹164, ZPOSL is available at an Adj. P/E of 54.3x (FY23), which appears to be aggressively priced. However, several factors contribute to its appeal, including a diverse client base spanning various industries, consistent revenue growth over the years, the company's expansion strategies, a diversified revenue model, and the flourishing digital payments sector.

It said, "Given these considerations, we recommend a "Subscribe" rating for the issue on a short- to medium-term basis."

Founded in 2011, the company is among a small number of uniquely positioned players with a diversified offering of fintech products and services, having one of the largest number of issued prepaid cards in India in partnership with certain of our banking partners (which constituted approximately 16.0% of India's total prepaid transaction volume, as of March 31, 2023), a diversified portfolio of SaaS, including tax and payroll software, and a wide touchpoint reach.

Also, the company is a leading player in spend management, with more than 50 million prepaid cards issued in partnership with banking partners and more than 2.27 million users serving, as of March 31, 2023.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.