Zaggle Prepaid Ocean Services IPO Opens Today: Price, GMP, Should You Subscribe?

Zaggle Prepaid Ocean Services IPO Day 1: The initial public offering of fintech player Zaggle Prepaid Ocean Services has opened for public subscription on Thursday, September 14. The Rs 564-crore IPO will remain open for subscription till Monday, September 18 (excluding Saturday and Sunday).

The company has mobilised Rs 253.52 crore from anchor investors ahead of its initial public offering (IPO). The company has allocated 1.54 crore equity shares to 23 entities at Rs 164 apiece, according to a circular uploaded on the BSE website.

Zaggle Prepaid Ocean Services IPO: Price Band, Lot Size, Key Dates

The price band for the IPO has been fixed at Rs 156-164 apiece, a hefty 156-164 times of the face value of its shares. The initial public offering comprises a fresh issue of equity shares up to Rs 392 crore and an offer for sale (OFS) by promoters and a few external investors aggregating up to Rs 174 crore.

The IPO allotment will take place on September 22. Zaggle Prepaid’s shares on BSE and NSE on September 27.

Investors have to purchase of lot of minimum 90 shares, requiring a minimum investment amount of up to Rs 14,760 to apply for the share. A retail investor can apply for a maximum of 13 lots.

Zaggle Prepaid Ocean Services IPO GMP

According to market observers, Zaggle Prepaid Ocean Services is currently trading Rs 36 higher in the grey market. The Rs 36 grey market premium or GMP is about 21.95 per cent higher than its upper issue price of Rs 164 per share. This means the grey market is expecting a 21.95 per cent listing gain from the public issue.

‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.

Zaggle Prepaid Ocean Services IPO: Should You Apply?

Most brokerage houses have given ‘avoid’ rating to this IPO.

Giving ‘avoid’ rating, StoxBox in a note said, “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.”

Giving ‘subscribe with a caution’ rating, another brokerage Choice Broking also said in its 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.”

Giving ‘avoid’ rating, brokerage Swastika Investmart in a note said, “There are some concerns about the company’s financial performance. The company has a major dependency on third parties, and it has faced negative cash flow and a decline in its profitability in recent years. Additionally, the company operates in a highly competitive industry.”

It also said the IPO is coming at a P/E valuation of 66.6x, which is significantly higher than the valuations of its listed peers. The company’s debt-to-equity ratio is also high.

“Overall, we believe that the risks outweigh the potential rewards for this IPO. We would avoid investing in this IPO,” Swastika said.

About Zaggle Prepaid Ocean Services

Founded in 2011, the company operates in the business-to-business-to-customer segment. It has created a market niche in the country by offering a combined solution for spend management through prepaid cards and employee management (through SaaS). ICICI Securities Ltd, Equirus Capital Private Ltd, IIFL Securities Ltd and JM Financial Ltd are the book-running lead managers to the issue.

The equity shares of the company will be listed on the BSE and NSE. In FY22, the company had reported Rs 370 crore in revenue, from which it had earned Rs 40 crore in net income.