Kacholia-backed Zaggle Prepaid IPO opens. Should you subscribe to the issue?
Ahead of the issue opening, Zaggle garnered Rs 253.52 crore from 23 anchor investors at the upper price band of Rs 164 per equity share.
Analysts remain mixed on the IPO, with few recommending to avoid it while others advising to bid for a short-to-medium-term view.
«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 and we believe it to be priced aggressively. We, therefore, recommend an 'Avoid' rating for the issue,» StoxBox said.
The price band for the IPO is fixed at Rs 156-164 per share and investors can bid for a minimum of 90 shares in one lot and in multiples thereafter.
At the upper price band of Rs 164, Zaggle Prepaid is available at an adjusted P/E of 54.3x (FY23), which appears to be aggressively priced, said Geojit Financial Services.
However, several factors contribute to its appeal, including a diverse client base spanning various industries, consistent revenue growth over the years, the company's expansion strategies, a diversified revenue model, and the flourishing digital payments sector, it added.
The brokerage recommends «Subscribe» rating for the issue on a short- to medium-term basis.
About 75% of the offer is set aside for qualified institutional buyers, 15% is reserved for non-institutional investors and 10% for retail investors.
Founded in 2011, Zaggle 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).
It also offers digitized solutions for employee tax benefits, expense management, corporate gifting and rewards and recognition programmes.
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