Zaggle Prepaid Ocean Services IPO - Investment Rationale, Issue Details, Financials, Risks: HDFC Securities

"BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..HDFC Securities Retail Research.Zaggle Prepaid Ocean Services Ltd. will launch its initial public offering on September 14 and will be concluded on Sep-18. The fintech and Saas solution provides has fixed the price band between Rs 156 – Rs 164 Apiece. Zaggle plans to raise Rs 392 crore via a fresh issue..Objects of issue: The offer comprises the fresh issue and the offer for sale. Offer for sale The selling shareholders, i.e., Raj P Narayanam, Avinash Ramesh Godkhindi, VenturEast Proactive Fund LLC, VenturEast SEDCO Proactive Fund LLC, Ventureast Trustee Company Private Ltd. (acting on behalf of Ventureast Proactive Fund), GKFF Ventures, Zuzu Software Services Private Limited and Koteswara Rao Meduri will be entitled to their respective portion of the proceeds of the offer for sale after deducting their respective proportion of offer expenses and relevant taxes thereon. Zaggle will not receive any proceeds from the offer for sale and the proceeds received from the offer for sale will not form part of the net proceeds. Objects of the fresh issue The company proposes to utilise the net proceeds towards funding of the following objects: Expenditure towards customer acquisition and retention; Expenditure towards development of technology and products; Repayment or prepayment of certain borrowings, in full or part, availed by the company; and General corporate purposes In addition to the above-mentioned objects, Zaggle expects to receive the benefits of listing of the equity shares on the stock exchanges..About the companyZaggle Prepaid Ocean Services operates in a segment where it interact and interface with its customers (i.e., businesses) and end users (i.e., employees) and are among a small number of uniquely positioned players with a diversified offering of fintech products and services, having one of the largest number of issued prepaid cards in India in partnership with certain of its banking partners (which constituted approximately 16.0% of India’s total prepaid transaction volume, as of March 31, 2023), a diversified portfolio of software-as-a-service, including tax and payroll software, and a wide touchpoint reach. It is a leading player in spend management, with more than 50 million prepaid cards issued in partnership with banking partners and more than 2.27 million users served, as of March 31, 2023. It offers a differentiated value proposition and diversified user base. It is sectoragnostic, and its network of corporate customers covers the banking and finance, technology, healthcare, manufacturing, FMCG, infrastructure and automobile industries, among others, where it has relationships with brands such as Tata Steel Ltd., Persistent Systems Ltd., Vitech, Inox, Pitney Bowes, Wockhardt, MAZDA, PCBL (RP – Sanjiv Goenka Group), Hiranandani group, Cotiviti and Greenply Industries..Competitive strengthsDifferentiated SaaS-based fintech platform, offering a combination of payment instruments, mobile application and API integrations.In-house developed technology and strong network effect.Business model with diverse sources of revenue and low customer acquisition and retention costs.Diversified customer relationships across sectors along with preferred banking and merchant partnerships.Seasoned management team with deep domain expertise supported by a professional workforce..Key concernsRecent revenue growth rates may not be indicative of future financial performance and Zaggle have limited operating history at its current scale;Inability to retain and attract customers, convert customers using its beta or trial versions into paying customers, or expand usage of its products within or across customer organisations; Termination of, or failure to maintain, relationships with banking partners, including preferred banking partners, or any changes to interchange fees due to a variety of factors; Dependence on third-party payment networks, channel partners and third-party providers for various aspects of its business and growth;  Challenges with adoption and usage of products if they are not able to successfully integrate with other software applications; Failure to effectively develop and expand direct sales capabilities affecting its ability to expand usage of its products within its customer and user base and achieve broader market acceptance of its products; Absence of any listed industry peers in India or abroad making it difficult to benchmark and evaluate financial performance against other operators who operate in the same industry as Zaggle; Counterparty credit risk and any delay in, or non-receipt of, payments may materially and adversely affect its cash flows and results of operations; Zaggle’s sites, networks, and systems may in the future experience security incidents or breaches;Operating in a highly competitive industry and an inability to compete successfully; International expansion efforts may not be successful; Inability to service debt obligations in a timely manner or to comply with various financial and other covenants and other terms and conditions of its financing agreements; Expenditure towards customer acquisition and retention, the outcome of which cannot be ascertained and its marketing efforts may not attract additional customers on a cost-effective basis, or it may be unable to manage its marketing and advertising expenses; and Laws and regulation governing business and operations may continue to change and evolve..Click on the attachment to read the full IPO report:.Zaggle Prepaid Ocean Services IPO: All You Need To Know.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner."

Zaggle Prepaid Ocean Services IPO - Investment Rationale, Issue Details, Financials, Risks: HDFC Securities

The fintech and SaaS solution provides has fixed the price band between Rs 156 – Rs 164 Apiece.

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Zaggle Prepaid Ocean Services IPO - Investment Rationale, Issue Details, Financials, Risks: HDFC Securities

The fintech and SaaS solution provides has fixed the price band between Rs 156 – Rs 164 Apiece.

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