Zaggle Prepaid Ocean Services Limited IPO Message Board (Page 10)

To those thinking of punting on the basis of hope that stock with PE of 80 will miraculously pop on the listing day due to big anchor names and big investment names do keep the possibility in mind that there is VERY high chance of Full Lot allotment, and god forbid if on the listing day local and global ques are bad then you will end up with NPA of 2 lakhs rupee approx.

I hope my friends in the forum have factored that in.

Good Luck.

True. It is high risk low reward

​@B.M.SURANA What is the GMP ?

Off topic Question
I want to avail Auto sweep facility with applying ipo and my fund debit only when ipo is alloted

please share some bank names which allow this

currenlty i am using sbi in which it is auto sweep out when i apply an ipo and lien is marked

please help with this issue

share some bank name in which sweep out only when ipo is alloted

Kotak

Its certain I am going to apply here

If you study Capital Structure well you will find something interesting

Will will give you the confidence to apply

Final Call 1.30 or 2.15 as per QIB activity

Try reading RHP for sure before applying
To sharpen your knowledge

Atleast Read Capital Structure for this IPO
Sirf 10 min lagega

Sir maximum listing gain you are expecting with this ipo
As currently traded near 10% in grey ... And I think it's going near 12-15 times in retail subscription.

@Sachinbhai
retails Subscription less than 7-8 x
12-15 times not possible

Skipping this risky one..many sme with good valuation are in line,or can also apply in upcoming mainboard..retailers be cautious...can see after listing...risky one.

Dear Ipoaspire,
Please suggest on aatamaj healthcare, buying price 48/-
Thanks

​@Ipoaspire, You had commented on Yason Chemex SME IPO page that it will go to 80 by September end. Do you still think it will reach even cost price within this week?

Don't apply in any ipo of new fintech very over valued. Think about PAY TM till today and I think whole life it will not cross it's ipo price. Anchor book to uski bhi solid thi.

There was a student
He was failed in class 10th
He tried again
He was failed again
Tried
Failed
Tried
Failed

His world came to an end
😢

​@harit your comment doesn't make sense, its discouraging others who keeps trying

RR se lekar sare ipo Riskey hai soch samaj kar Apply

Please share your opinion for apply or not for listing gain!!

This week vaibhav jewellers is Gem ipo

In anchor i saw abakkus fund..... Due to this I want to apply one bhni.....however after 1:30 pm.... Other boarders may put their views

​@GrayIsTheNewBlack  These are long term players, while GMP just talks about listing.
Certainly, this alone can't be a compelling reason, but it further validates one's optimism.

​@ValueSeeker , I agree that GMP is short term while the names you mentioned are long term investors.
With the current subscription there is a good chance of more than usual allotment in bHNI category.
I don't know your risk profile but the quantity can be too big to handle for few if it lists in discount.
If you are applying based on your own analysis and using bigger names only as validation. I think that's a good approach 👍

Applying few retails here.

Are we near the peak of bull run??

What explains retail money aka dumb money applying with full force in this highly risky IPO?

Retail has become sooo greedy that even the LOW GMP is Not detering it!!

Poor retailers like me learned my lessons in Paytm, bhaiya IPOs can open lower also.

Still such is the desire to speculate, bet, try luck, make quick money that retail crowd throws all common sense to the wind.

Zaggle may open few bucks above the IPO price but the risk to reward ratio is Not favourable because it will be highly vulnerable to the market mood of the listing day.

Can plunge to negative as well!

I live by the mantra: money saved is money earned mantra.

WON'T APPLY in capital guzzling business.

- ROE 47% is impressive.
- D/E - 2.48 (hopefully some debt reduction post IPO proceeds)
- It is true that it is the only Indian player but there are multiple foreign players also operating in the same segment in India. My employer uses services of one of their foreign competitor for employee spend management.
-Valuations are very expensive but at the same time anchor book is really strong.

So, there are positives as well as negatives.
Risk takers may apply others may skip.

P.S. If lists positive, I will not say meine bola tha 😛
GMP around 15

Zaggle Prepaid Ocean Services Ltd GMP 13.50 ~ 16.50 @ 9pm # 16 Sep #

If someone still don't understand how this fintech working,here is something for you

https://finshots.in/markets/the-zaggle-ipo/

Very Risky Ipo
iam avoiding

Good anchor book with Ashish Kacholia, Sunil Singhania, Ravi Dharamshi. Pre IPO placement @ Rs 164 includes Ashish Kacholia, Himanshi Kela (not sure if related to Madhu Kela), Ravi Dharamshi Value Quest etc.
Average cash flow for 20-21 and 21-22 and poor cash fow for 22-23
In 22-23, revenue increase by 50% while PBT dropped 30%.
YoY jump in revenue due to jump in propel platform revenue from Rs 154 cr to Rs 360 cr whereas cost of point redemption, gift card jumped from Rs 144 cr to Rs 319 cr. Although very small @ 5%, it shows that operating leverage is kicking in.
In absolute terms, other expenses decreased by 7%. Company attributes this to lower incentives and cash backs offered to our Users. Whether it will remain sustainable going forward remain to be seen
YoY advt & promotion expenses have jumped 54% while network charges have jumped 4X.
In 20-21 and 22-23, company made bad debt provision of Rs 2 cr while in 22-23 it reversed the provision by Rs 1.6 cr. YoY, receivable more than 6 months have jumped from Rs 88 lacs to Rs 135 lacs.
Company had 273 employees as on 31-Mar-23. It deposited PF of 248 employees for Jul-23, 296 employees for Nov-22 and 221 employees for Jul-22.
Attrition levels for permanent employees was 31%, 27% and 24% in Fiscals 2023, 2022 and 2021. It speaks about work culture and employee perception of the company. Also for gratuity provision, company has considered attrition rate of 1% to 5% for the last 3 fiscal.
Average User base per business was 943, 983 and 828 for the last 3 fiscal. It denotes strength of customer relationship.
Acquisition and Retention Cost per Customer was Rs 5 lacs, Rs 2.8 lacs and Rs 2 lacs for the last 3 fiscals. It shows that company has to keep spending more money to acquire new business. Customer churn rate has jumped from 0.37% to 1.5% in 1 year. Although small as of now, any increase will have adverse impact of future profitability.
Widespread customer base with top 5 customers accounting for only 8% of total revenue.
Rate of interest for various loans – vehicle loans 8.25% max, property loan 6.9%, unsecured loan 12 to 14%, term loans and NCDs 10% to 13.5%.
Miscellaneous income of the company has jumped from Rs 1.6 cr to Rs 4.7 cr, YoY.

Ye ipo retail me Max 4 to 5X hoga kyunki premium gir gya he aur recent listing ki wajah se aur mkt condition ki wajah se

Ab third party bandh hone ki wajah se ipo kam subscribe hoge aur jyada Axis Bank k account close hoge jo sirf third-party ipo k liye open kiye hue the

The Story
If you got your first job over a decade ago, you might remember that if you did well at work you'd probably find an envelope with some cash on your desk. Or maybe you’d get some coupons that could be spent only at select places. You’d stuff it into your wallet and go out to spend it.

It was a little cumbersome.

And that’s the problem the founders of Zaggle Prepaid Ocean Services (don't ask why it says Ocean) saw back in 2011 . They wanted to make the lives of employees simpler. And that of the company too. So they introduced cards that could do the good work instead.

But wait…Zaggle isn’t a bank or an NBFC. Then how could it issue cards?

The trick is Prepaid Payment Instruments (PPIs).

Think of PPIs as a digital wallet or card that functions like a mini bank account. It could be a gift card that someone can top up with money. And the recipient of the card can use this “stored” money to make any purchase they want. And you don’t need to be a bank to deal with PPIs. You can simply partner with them to get the ball rolling.

And that’s what Zaggle did for nearly 3 years. They put their head down and went after improving the rewards and recognition (R &R) market through these cards.

Once they kind of had that in the bag, they turned to the next thing.

Again, rewind a decade. And you probably remember being issued some paper slips along with your monthly salary. You could use them to pay for food at the cafeteria. Or when you bought groceries. These expenses — up to a limit — could be claimed tax free. But the bits of paper were a headache. You could easily misplace it and there would be no way out.

So in 2016, Zaggle saw it as the next logical step. They’d launch a multi-wallet card along with Visa. Employees could use it online or offline. It could be for meal vouchers. It could be for transport. It could be for some other thing. But it was simple.

Zaggle’s evolution as a fintech had begun. And they were in the right place at the right time as the use of such prepaid cards began to explode.

Then came the biggie — expense management.

Say you had to travel to another city for an emergency meeting with a client, you might have had to swipe your own card. Then ensure that you carefully saved receipts right from the cup of coffee you had at the airport to the taxis to the food. And once you submit it, maybe wait for a month before it was reimbursed.

Now ask the HR team at your company and they’ll probably tell you that they don’t want to deal with the tedious task of tracking expenses and reimbursements of the employees. They don’t want to deal with bits of paper and receipts. And in large organizations, this could be quite voluminous. The HR would rather avoid this mundane stuff and pay attention to more value adding activities that can keep everyone engaged and motivated.

And Zaggle saw the opportunity to expand its business in this domain too. It began to create Software that would digitize this process. And help companies manage overall expenses on a single dashboard. Zaggle could sell it for a subscription. And they even had software to manage employee rewards and recognition. It wasn’t just about the cards.

Now there’s a bunch of other little stuff that they do too. But that’s the gist of the business segments that Zaggle dabbles in. It’s quite diversified. And you see how they’re a fintech + SaaS company now, don’t you?

Anyway, that means Zaggle's revenue stream is quite diversified too.

For starters, there’s revenue from corporate clients for issuing reward points (Propel points) to their employees. These are the points that can be redeemed for stuff on the platform. Then there’s the money they earn from banking partners whenever prepaid cards are swiped at offline or online points of sale which is part of what they call Program fees. They charge customers multiple fees for implementing the products. And they also earn a recurring subscription from the software they sell. And they’ve also started earning commissions from their ‘value added services’ — for instance, they’ve tied up with Fibe and Tata Securities for loans and wealth management products that employees can avail. So each time someone signs up, Zaggle gets paid.

Source: Company Red Herring Prospectus
And it’s a pretty hot market. Even globally, investors have been pouring billions of dollars into funding these expense management companies. As one CEO put it, it’s part of “a desire on the part of companies of all sizes and stages seeking to save money by managing their spend better.”

So Zaggle seems to be in quite a sweet spot. And by offering this full product suite, they’ve quickly amassed a loyal customer base of over 2,400 customers split 75:25 between large corporate accounts and small businesses. We say loyal since Zaggle seems to be pretty good so far with customer retention. The churn rate is just about 1.50% in the past 3 years. Although we do have to mention here that it’s a young company with even younger products. So the churn rate could go up in the future as competition gets more intense too.

And maybe the company is aware of this. Maybe that’s why nearly 70% of the ₹560 crore IPO is an issue of new shares. The company will receive fresh funds and the number one item on their agenda is to acquire new customers and retain existing ones — which probably means fresh spends on building out tech as well.

Now all this sounds great, right?

So, what’s the catch in the IPO? What are the risks?

Well, the borrowings have risen quite a bit. In March, the company raised ₹50 crores as a loan from a venture debt company. Sure, part of the IPO proceeds will be used to repay this. But you have to wonder why a SaaS company resorted to debt especially when it was so close to an IPO. Because the end result right now is that the company seems quite leveraged. The ratio of debt to equity is nearly 3 times.

Then there’s the fact that even though the revenues look good on paper, there’s quite a bit of expenses too. For instance, there’s a cost that the company bears when reward points are redeemed or gift cards are used — 63% of Zaggle’s total expenses are attributed to this segment. And the end result is that the company makes just ₹20 crores in profits on over ₹550 crores of revenues. It’s not a great net profit margin.

Then there’s the valuation. A PE (Price-Earnings ratio) of nearly 70 times is causing some discomfort among potential investors already. Many feel that the company does not have the track record to really command this premium.

So yeah, it might be a unique HR fintech company operating in a segment that’s poised to grow. It might be a 12-year-old startup that’s actually profitable. But there are some question marks you need to mull over

Many might not have Zerodha account, even if they have they might not have read it bcoz of too many promotional emails sitting in inbox. So posting in this forum even if it is copy and paste benefits this forum members and increases its visibility. We only need to worry if it does not comprise facts.

Zerodha ka IPO lavo, ye sab bakwaas hai :)

It seems like a sodexo card. Just received mail from finshot by zerodha. They very well explained it's business.