1 week ago
The initial public offering (IPO) of Zinka Logistics Solutions Ltd., a digital platform for truck operators, kicked off for subscription on November 13. The company, which has fixed a price band of ₹259-273 per share, will be available for bidding till November 18.
The IPO will fetch ₹1,114.72 crore at the upper end of the price band.
Ahead of its IPO opening, Zinka Logistics has garnered ₹501 crore from anchor investors.
Foreign and domestic institutions that participated in the anchor round includes Nomura, Hornbill Orchid India Fund, Steadview Capital Mauritius, TIMF Holdings, Florida Retirement System, Massachusetts Institute of Technology, Carmignac Portfolio, BNP Paribas Funds, Pinebridge Global Funds, and Societe Generale. SBI MF, Invesco India, Bandhan MF, ICICI Prudential Life Insurance, Ashoka Whiteoak, SBI General Insurance, and Nuvama Multi Asset Strategy Return Fund.
Zinka Logistics IPO review
SBI Securities: Avoid
The brokerage, in a note, said the company is able to scale up existing business and add new verticals like vehicle financing, load marketplace etc, then operating leverage can lead to increase in profitability over next 2-3 years. However, looking at the expensive valuation, it has recommended investors to 'avoid' the issue.
Swastika Investmart: Avoid
Swastika Investmart has advised investors to consider skipping this IPO for now, saying the company has a low promoter holding, which may impact investor confidence.
It also said that Zinka Logistics is the largest digital platform for truck operators, benefiting from strong network effects but the company is financially challenged with ongoing losses and negative cash flow, though it has shown signs of recovery in the first quarter of the current year.
The brokerage said that it becomes difficult to assess on a P/E (price-to-earnings) basis due to negative earnings.
BP Wealth: Subscribe
Given the company’s strong market presence and industry tailwinds, it provides a medium- to long-term opportunity, the brokerage said while adding a 'subscribe' rating for the issue.
Marwadi Financial Services: Subscribe
The brokerage has assigned a 'Subscribe' rating to the IPO as the company has India's largest digital platform for truck operators and omnichannel distribution network driving sales. Also, it is available at a reasonable valuation as compared to its peer.
Canara Bank Securities: Subscribe for long term
Adding a 'subscribe for long-term' rating, Canara Bank Securities said the IPO is recommended as a favorable investment in the logistics tech sector. However, it said that the company should be monitored closely for regulatory changes and competitive pressures that could impact its profitability and market share.
Adroit Financial Services: Subscribe
Adroit has recommended investors to 'subscribe' to the IPO for long-term investment, and considering its valuation and growth potential.
Some key parameters such as Ebitda margin and PAT margin turned positive, and they were at 14.77% and 32.91% for the June quarter of the current year respectively. The price-to-book value of the company as of June 30, 2024 is 14.6 times, the brokerage said.
Zinka Logistics IPO GMP
Though the grey market premium (GMP) of the Zinka Logistics IPO surged ahead of the issue opening, it is currently nil. Previously, shares of Zinka Logistics were trading at a premium of ₹24-25 in the unofficial market.
Zinka Logistics IPO details
The IPO is a mix of fresh offer of up to ₹550 crore and an offer for sale of up to 2.06 crore equity shares by Promoter and Investor Selling Shareholders.
Investors can bid for a minimum of 54 equity shares in one lot and in multiples of 54 equity shares thereafter.
The offer is being made through the book-building process, wherein not less than 75% of the net offer will be available for allocation on a proportionate basis to qualified institutional buyers, 15% for non-institutional investors, and the remaining 10% for retail individual investors.
A discount of ₹25 per equity share is being offered to eligible employees bidding in the employee reservation portion.
Zinka Logistics IPO objective
Proceeds from its fresh issue will be used to the extent of ₹200 crore for funding towards sales and marketing costs, ₹140 crore for investment in Blackbuck Finserve Pvt. Ltd. for financing the augmentation of its capital base to meet its future capital requirements, ₹75 crore for funding of expenditure in relation to product development, and general corporate purposes.
Company overview
Incorporated in April 20, 2015, Zinka Logistics Solutions Ltd. is touted to be the country's largest digital platform for truck operators (in terms of number of users), with 963,345 truck operators in the country transacting on their platform in fiscal 2024, which comprises 27.52% of India’s truck operators.
Using the company's platform, their customers (primarily comprising truck operators) digitally manage payments for tolling and fueling, monitor drivers and fleets using telematics, find loads on their marketplace and get access to financing for the purchase of used vehicles.
Truck operators use the BlackBuck mobile application for their diverse business needs.
The company's gross transaction value (GTV) in payments was ₹5,356 crore and ₹17,396 crore in the three months ended June 30, 2024 and fiscal 2024, respectively.
For the three months ended June 2024, the company's revenue from continuing operations stood at ₹92.17 crore with a profit after tax of ₹28.67 crore.
Axis Capital Ltd., Morgan Stanley India Company Pvt. Ltd., JM Financial Ltd. and Iifl Securities Ltd. are the book running lead managers to the BlackBuck IPO, while Kfin Technologies Ltd. is the registrar.
The allotment for the BlackBuck IPO is expected to be finalised on November 19, while the company's shares will list on BSE, NSE with tentative listing date fixed as November 21, 2024.
