Zaggle IPO Subscribed 43% on Day 2, QIB Response Lukewarm

| Leave a Comment | IPO

Zaggle Prepaid Ocean Services IPO was subscribed to just 43% on the second day of bidding, with it receiving bids for 82.98 lakh equity shares against the offered size of 1.93 crore shares. Retail investors have provided good support to the offer, buying 1.9 times their reserved portion, which is 10% of the IPO size. However, the response from high networth individuals (HNIs) and qualified institutional buyers (QIBs) was lukewarm, buying 29% and 0.02% of the portion set aside for them, which is 15% and 75% of the total offer size, respectively.

The business spend management platform provider intends to raise Rs 563.38 crore via a maiden public issue that comprises a fresh issuance of shares worth Rs 392 crore and an offer-for-sale (OFS) of 1.04 crore shares worth Rs 171.38 crore by selling shareholders including promoter Raj P Narayanam, Avinash Ramesh Godkhindi, and corporate entity Zuzu Software Services. Of which, Rs 253 crore has already been raised by the company via anchor book on September 13, a day prior to the issue opening.

Global investors like Neuberger Berman, Morgan Stanley, Matthews Asia Funds, Eastspring Investments, Copthall Mauritius Investment, Societe Generale, Goldman Sachs, and domestic fund houses like Kotak MF, ICICI Prudential, LIC Mutual Fund, and Abakkus were participants in the anchor book.

The net fresh issue money will be spent on customer acquisition and retention, the development of technology and products, the repaying of debts, and general corporate expenses.

Zaggle, which is strategically positioned at the intersection of the SaaS and fintech ecosystems, 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 topline, with operational revenue growing at a CAGR of 100.8% during FY20-FY23 due to the addition of new customers and an increase in user base from existing customers.

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, which feels the issue seems to be aggressively priced and thus assigned a subscribe with caution rating to this issue.

However, profitability margins, which showed an improvement in FY22, all showed a steep decline (of 715 bps on-year) in FY23. EBITDA margin and EBIT margin saw significant decreases in FY23 (743 bps and 799 bps, respectively).

The company is bringing the issue at a price band of Rs 156-164 per share at a P/E multiple of 87x on an issue FY23 basis.

Hem Securities assigned subscribe for a long-term rating on the issue launched by the company having a differentiated SaaS-based fintech platform, offering a combination of payment instruments, mobile applications, and API integrations.

“The company’s in-house developed technology and strong network effect along with a business model with diverse sources of revenue and low customer acquisition and retention costs & diversified customer relationships across sectors along with preferred banking and merchant partnerships is looking a decent avenue to deploy the funds in,” the brokerage said.

Analysts’ Outlook

Analysts are cautious about the IPO given the lukewarm response from QIBs and the aggressive pricing. They advise investors to do their own research and invest carefully.


Related News

  • 22 Sep

    Samhi Hotels Stock Lists with 6.75% Premium, Analysts Recommend Booking Profits

    Samhi Hotels stock made a weak debut on the stock exchanges, listing at a premium of just 6.75% over the IPO price. Several analysts have recommended booking profits in the stock, citing its loss-making status and negative net worth.

  • 22 Sep

    Signature Global IPO Subscribed 11.88 Times on Final Day

    The Signature Global IPO was subscribed 11.88 times on the final day of bidding. The company will use the proceeds to repay debt and for land acquisitions and general corporate purposes. The IPO is expected to list on October 4, but this may change due to the new timeline of T+3.

  • 22 Sep

    Sai Silks IPO Oversubscribed 4.4 Times on Final Day of Bidding

    Sai Silks IPO was oversubscribed 4.4 times on the final day of bidding, with qualified institutional buyers and high networth individuals supporting the issue on closing day. The net fresh issue proceeds will be utilized by the company mainly for the setting up of 30 new stores, two warehouses, working capital requirements and repaying debts. The trading in its equity shares will commence with effect from October 4, as per the IPO schedule.

  • 22 Sep

    Pharma company Valiant Laboratories to go public on September 27

    Pharma company Valiant Laboratories is going public on September 27 at a price band of Rs 133-140 per share. The company plans to raise Rs 152.46 crore via the IPO. Proceeds will be used to fund the expenditure for setting up a manufacturing facility for speciality chemicals and for working capital requirements and general corporate purposes. Valiant Laboratories is a Mumbai-based API and bulk drug manufacturing company with a focus on Paracetamol. It is owned by the promoters including Dhanvallabh Ventures LLP, which holds 62.5 percent shareholding. Valiant Organics, the listed entity on the BSE and NSE, is the promoter of Dhanvallabh Ventures LLP with 73.15 percent stake.

  • 21 Sep

    Unihealth Consultancy makes tepid debut on NSE Emerge

    Unihealth Consultancy, a healthcare service provider, made a tepid debut on the NSE Emerge platform on September 21, listing at Rs 135, a 2.2 percent premium over its issue price of Rs 132. The stock was trading at Rs 137.30 at 11.40 am. The company has a number of positives going for it, such as its strong growth potential, its diversified business model, and its focus on the African market. However, investors who are considering investing in Unihealth Consultancy should carefully consider the company's fundamentals, the current market conditions, and their own risk appetite before making a decision.

Leave a Reply

Your email address will not be published. Required fields are marked *