SAMHI Hotels, Zaggle Prepaid buck the recent trend of strong IPO debuts. Should you sell?
SAMHI Hotels and Zaggle Prepaid, even though in-line with Street expectations, were against the recent trend of robust gains on listing day.
SAMHI opened with a mild premium of 8%, while Zaggle saw a flattish debut at its issue price.
Even though Zaggle Prepaid is a unique player in the fintech industry, analysts said investors should exit positions as the IPO was aggressively priced.
«Zaggle has a major dependency on third parties and has faced negative cash flow and a decline in its profitability in recent years. The IPO valuation was also high.
Investors should exit their positions, but those who want to hold for some gain should maintain a stop loss at 148,» said Shivani Nyati, Head of Wealth, Swastika Investmart.
Zaggle, backed by ace investor Ashish Kacholia, 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).
The company has clocked revenue growth of 49% in FY23 to Rs 553 crore and a profit after tax of Rs 22.9 crore, nearly half from a year ago.
«We believe that the IPO is aggressively priced at a P/E of 66.7x FY23 earnings.
Also, the fintech industry in which the company operates is highly competitive which may affect the company's earnings prospects. We, therefore, advise investors who have received allotment to sell their shares today and consider other avenues for investment,» said Shreyansh Shah, Research Analyst, StoxBox.
SAMHI Hotels, which also made its debut on the exchanges earlier today, should also be treated in the same way by booking profits, according to analysts.
This is mainly because of poor financials in the last three financial
