The Rs 563.38-crore initial public offering (IPO) of Zaggle Prepaid Ocean Services saw a lackluster response from the investors during the first few hours of the bidding process. The issue, which opened for bidding on Thursday, September 14, will conclude on Monday, September 18.Zaggle Prepaid Ocean Services is selling its shares in the range of Rs 156-164 apiece during the three-day bidding process and investors can make a bid of a minimum of 90 equity shares and its multiples thereafter. The issue includes a sale of fresh equity shares worth Rs 392 crore, while an offer-for sale (OFS) of up to 1.05 crore equity shares worth Rs 171.38 crore. According to the data, the investors made bids for 24,25,590 equity shares, or merely 13 per cent, compared to the 1,93,26,761 equity shares offered for the subscription by 2.45 pm on Thursday, September 14. The bidding was mainly led by retail investors on the first day. The allocation for retail investors was booked 61 per cent, while the portion for non-institutional investors saw a subscription of only five per cent. However, the portion reserved for qualified institutional bidders (QIBs) was not even off the mark at the same time. Incorporated in 2011, Zaggle Prepaid Ocean Services provides financial technology (fintech) products and services to manage corporate business expenses through automated and innovative workflows. As of FY 2023, it had seven offices across India, more than 1,750 customers, and over 1.7 million end users. Brokerage firms are not very positive on the issue and have flagged the aggressive valuations and highly competetive nature of the business as the key risks and . Also, over dependence on select clients and inability to attract new customers may dampen the prospects further, they said. However, some have suggested to bid for the issue with a word of caution. "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," said StoxBox with an 'avoid' rating. Several factors contribute to its appeal, including a diverse client base spanning various industry, consistent revenue growth over the years, the company's expansion strategies, a diversified revenue model, and the flourishing digital payments sector. Given these, we recommend a 'Subscribe' rating for the issue on a short- to medium-term basis, said Geojit Financial Services. Ahead of its IPO, the company undertook a pre-IPO placement of 44.51 lakh equity shares at a price of Rs 164 per shares aggregating to Rs 73 crore on August 16 and a similar placement of 15.24 lakh equity shares at same price amounting to Rs 25 crore on August 21. This has reduced the size of fresh issues in the offering. India has the fastest-growing digital payments industry in the world and India’s fintech ecosystem has grown rapidly. Zaggle’s diversified customer relationships across sectors, In-house developed technology, strong network effect, strong customer retention capability, and diversified revenue streams, portrays strong growth prospects, said Hensex Securities with 'subscribe' tag. ICICI Securities, Equirus Capital, IIFL Securities and JM Financial are the book-running managers to the issue, while Kfin Technologies has been appointed as the registrar to the issue. Shares of the company are likely to be listed on both BSE and NSE. Disclaimer: The content of this webpage is not an investment advice and does not constitute any offer or solicitation to offer or recommendation of any investment product(s). It is for general purposes only and does not take into account your individual needs, investment objectives and specific financial circumstances. Investment involves risk. You should refer to the offering documentation of the product(s) for detailed information (including risk factors) prior to investing in any product(s). If you have any queries on the discussed subject matter, you should seek independent professional advice. Business Today does not guarantee, vouch for, endorse any of its contents and hereby disclaims all warranties, express or implied, relating to the same.
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