FinTech firm Zaggle Prepaid Ocean Services made a muted debut on the bourses today, September 22, 2023. The stock listed at ₹164 on the NSE, same as the issue price. Meanwhile, on the BSE, it listed at ₹162, a 1.22 percent discount.
The ₹563-crore initial public offering (IPO) was open for subscription between September 14 and September 18, Friday and the price band for the issue was fixed in the range of ₹156-164 per share.
The issue was overall subscribed to 12.86 times, thanks to qualified institutional bidders (QIBs), whose quota was booked 16.94 times. The non-institutional investors' category was subscribed to 9.16 times and the allocation reserved for retail investors was subscribed to 6.15 times during the three-day book-building process.
The IPO comprised of a fresh issue of 2.39 crore shares, aggregating up to ₹392 crore and an offer-for-sale (OFS) of 1.04 crore shares worth ₹171.38 crore by promoter shareholders Raj P Narayanam, Avinash Ramesh Godkhindi, and others.
The company plans to use the net proceeds from the offering to fund customer acquisition and retention costs, product and technology development costs, general corporate expenses, and the repayment or prepayment of some borrowings that the company has taken out, in full or in part.
Brokerages were mixed on the issue. Some recommended subscribing to the issue driven by its diverse client base, consistent revenue growth, diversified revenue model, and flourishing digital payments sector. However, the IPO seems aggressively priced, which kept others on the sidelines.
Founded in 2011, Zaggle Prepaid Ocean Services is a prominent player in the business-to-business-to-customer (B2B2C) segment. The company specialises in delivering fintech products, including prepaid cards and software-as-a-service (SaaS) solutions, to corporate clients across various sectors. ZPOSL occupies a distinctive position at the convergence of the SaaS and fintech ecosystems. It offers a comprehensive SaaS platform geared towards addressing essential business functions, such as business spend management (covering expense and vendor management), rewards and incentives management for both employees and channel partners and a customer engagement management system (CEMS).
Zaggle’s revenue grew at a 52 percent CAGR over FY21–23, while its Adj. PAT grew 38 percent CAGR during the same period due to an increase of 151 percent in the user base. For FY23, ZPOSL recorded a consolidated net profit of ₹36.9 crore, with its revenue reaching ₹553.5 crore. For the last three fiscals, the company has posted EBITDA margins of 11.5 percent (FY21), 16 percent (FY22), and 11 percent (FY23 adjusted EBITDA), and its Adj. PAT margins were 8.1 percent, 11.3 percent, and 6.7 percent for the corresponding periods, respectively.
ICICI Securities Limited, Equirus Capital Private Limited, IIFL Securities Limited and JM Financial Limited were the book-running lead managers to the offer.