Zaggle Prepaid Ocean Services, a fintech and SaaS company that offers solutions for corporate expense management, has launched its initial public offering (IPO) today. The IPO will close on September 18 and the shares are expected to list on BSE and NSE by September 27. Here are some key details about the company and its IPO.
About Zaggle Prepaid Ocean Services
Zaggle Prepaid Ocean Services was incorporated in 2011 and has seven offices across India. The company provides a range of products and services, such as prepaid cards, expense management software, employee rewards and recognition platform, and digital payments gateway. The company claims to have more than 1,750 customers and over 1.7 million end users as of FY 2023. Some of its clients include HDFC Bank, ICICI Bank, Infosys, Wipro, Reliance Industries, Tata Motors, and Flipkart.
IPO details
The IPO size is Rs 563.38 crore, which comprises a fresh issue of Rs 392 crore and an offer for sale (OFS) of up to 1.04 crore equity shares by the promoters and existing shareholders. The price band is Rs 156-164 per share and the minimum lot size is 90 shares. The company has reserved up to 50% of the issue for qualified institutional buyers (QIBs), up to 15% for non-institutional investors (NIIs), and up to 35% for retail investors.
The company has already raised Rs 98 crore from two pre-IPO placements in August at Rs 164 per share. The pre-IPO investors include Axis Mutual Fund, ICICI Prudential Mutual Fund, SBI Mutual Fund, Sundaram Mutual Fund, and UTI Mutual Fund.
Objectives of the issue
The company plans to use the net proceeds from the fresh issue for the following purposes:
- Expenditure towards customer acquisition and retention
- Expenditure towards the development of technology and product
- Repayment or pre-payment of certain borrowings
- General corporate purposes
The funds from the OFS will go to the selling shareholders of the company.
Financial performance
The company has reported a revenue of Rs 222.62 crore in FY 2023, up from Rs 165.07 crore in FY 2022. The net profit for FY 2023 was Rs 28.51 crore, compared to Rs 17.65 crore in FY 2022. The company’s earnings before interest, tax, depreciation, and amortization (EBITDA) margin improved from 16.5% in FY 2022 to 19.8% in FY 2023.
Risks and challenges
The company faces competition from other players in the fintech and SaaS space, such as Happay, Zeta, Fyle, NiYO, Razorpay, and Paytm. The company also depends on third-party service providers for its card issuance, payment processing, cloud infrastructure, and software development. Any disruption or failure in these services could affect the company’s operations and reputation.
The company is also subject to various regulatory and legal risks, such as compliance with RBI norms, data protection laws, taxation laws, anti-money laundering laws, and consumer protection laws. Any changes or violations in these regulations could adversely impact the company’s business and financials.
Outlook and valuation
The company expects to benefit from the growing demand for digital payments and expense management solutions in India, especially among small and medium enterprises (SMEs) and startups. The company also aims to expand its product portfolio, customer base, geographic presence, and strategic partnerships in the future.
According to a report by Axis Capital, the company is valued at a price-to-earnings (P/E) ratio of 19.8x based on FY 2023 earnings at the upper end of the price band. This is lower than the industry average of 25x for fintech companies. The report also states that the company has a strong growth potential, high profitability, diversified revenue streams, scalable business model, and experienced management team.
