Zaggle Prepaid Ocean Services Limited IPO

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14th – 18th Sep 2023
27 Sep 2023
₹156 – ₹164
90 shares (₹14760)

About


Incorporated in 2011, Zaggle Prepaid Ocean Services Limited operates in the Fintech space where it offers fintech products and services, having one of the largest number of issued prepaid cards in India in partnership with their banking partners (which constituted approximately 16.0% of India’s total prepaid transaction volume, as of March 31, 2023), It has a diversified portfolio of SaaS, including tax and payroll software, and a wide touchpoint reach.

Zaggle 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.

The company’s core product portfolio includes:

  • ‘Propel’, a corporate SaaS platform for channel rewards and incentives, employee rewards and recognition.
  • ‘Save’, a SaaS-based platform and a mobile application to offer expense management solutions for business spend management facilitating digitized employee reimbursements and tax benefits.
  • ‘CEMS’, a customer engagement management system that enables merchants to comprehensively manage their customer experiences including rewarding merchants through gift card and loyalty benefits.
  • ‘Zaggle Payroll Card’, a prepaid payroll card that allows our Customers to pay contractors, consultants, seasonal and temporary employees, and unbanked wage workers as an alternative to direct deposits to bank accounts or cash payments.
  • ‘Zoyer’, an integrated data-driven, SaaS-based business spend management platform with embedded automated finance capabilities in the core invoice-to-pay workflows.

As of fiscal 2023, the company has over 250 employees, 7 offices across India, more than 1750 customers, and over 1.7 million end users.

The company operates in multiple sectors which cover the banking and finance, technology, healthcare, manufacturing, FMCG, infrastructure, and automobile industries, among others, They have relationships with brands such as TATA Steel, Persistent Systems, Vitech, Inox, Pitney Bowes, Wockhardt, MAZDA, PCBL (RP – Sanjiv Goenka Group), Hiranandani group, Cotiviti, and Greenply Industries.

Customer Base – Breakdown

Particulars FY23 FY22 FY21
Corporate accounts (more than 250 Users) 1,832 1,318 797
SMB accounts (up to 250 Users) 579 435 295
User base 2,274,138 1,723,350 904,713

About the industry:

Overview of the Fintech Market in India:

India’s fintech ecosystem has approximately 2100 start-ups spread across a wide range of segments such as payments, lending, wealth tech, insurance tech, and neo-banking. This industry has already raised more than 25% (approximately) of all start-up funding in India and is anticipated to receive further interest from investors. India’s fintech market revenue is estimated to reach approximately ₹8,341 billion in 2027 from ₹3,123 billion in 2022 as a result of supportive government policies, rising investments, and a fintech adoption rate of approximately 87%, the highest compared to other countries.

Digital Payments Market in India:

India has the fastest-growing digital payments industry in the world, with a five-fold increase in contactless payments from 2016 to 2023. To meet expanding customer demand, the number of businesses accepting contactless payments has increased six-fold in the past three years from 2018 to 2021. The sectors driving the growth are quick-service restaurants, pharmacies, food, and grocery. The RBI-DPI Index continues to show a considerable increase in digital payment usage and penetration across India. In Fiscal 2022, UPI is expected to account for approximately 86% of all consumer payments, with mobile wallets accounting for only approximately 2.4%. With the significant increase in UPI traffic, it is forecasted that digital payments (debit cards + credit cards + UPI) from consumers to merchants climbed approximately 114% in Fiscal 2019 to more than 420% in Fiscal 2021 and is on track to reach 1,575% in Fiscal 2022 from Fiscal 2018.

Overview of Prepaid Card market:

Corporate prepaid cards offer improved cash flow management, quicker employee reimbursement, more security than checks and cash, and do not affect credit scores. They are commonly used as gift cards, meal cards, travel cards, and payday cards.

The Indian prepaid card market for transaction value has recently boomed and is predicted to grow at a CAGR of approximately 35.8% from 2022 to 2027 as the commercial sector rapidly adapts to the usage of prepaid cards.

Objects of the issue and proceeds utilization:

The Rs. 563.38 crores public offer of Zaggle Prepaid Ocean Services Limited IPO comprises fresh equity issue worth 392 crores and OFS worth 171.38 crores.

Purpose Proceeds (₹ crores)
Expenditure towards Customer acquisition and retention 300
Expenditure towards development of technology and products 40
Repayment or prepayment of certain borrowings, in full or part, availed by our Company 17.83
General corporate purposes Balance

Financial information and other valuation metrics

Financial Year Total Assets (₹ crores) Total Revenue (₹ crores) Profit After Tax (₹ crores) EPS EBITDA (₹ crores)
March 31, 2021 62.08* 240.29* 19.33 2.11 27.63
March 31, 2022 92.65* 371.66* 41.92 4.57 59.85
March 31, 2023 234.75 554.58 22.90 2.48 48.09

* = Standalone numbers

Risk factors to consider:

Dependance on the relation with banking partners: As 30% of revenue comes from its banking partners, Any termination of, or failure to maintain relationships with their banking partners, including Preferred Banking Partners, or any changes to their interchange fees due to a variety of factors, could adversely affect the business, results of operations and financial condition.

Subscription-based business model: The company may be unable to retain existing Customers, attract new customers, convert Customers using their beta or trial versions into paying Customers, or expand usage of their products within or across Customer organizations due to various factors.

Lack of comparison with other listed companies: The company does not have any listed industry peers in India or abroad and it may be difficult to benchmark and evaluate their financial performance against other operators who operate in the same industry as them.

IPO Schedule

Issue Period 14th September to 18th September 2023
Deadline for accepting UPI mandate Until 5 PM on the issue closing day
Finalization of Allotment 22nd September 2023
Initiation of Refunds 25th September 2023
Credit of Shares 26th September 2023
Date of Listing 27th September 2023
Mandate end date 3rd October 2023
Anchor Investors Lock-In End Date 18th October 2023

How to apply to the Zaggle Prepaid Ocean Services Limited IPO?

You can apply for the Zaggle Prepaid Ocean Services Limited IPO using any supported UPI app by following two steps:

  • Enter your bid on Kite
  • Accept the UPI mandate on your phone

On acceptance of the mandate, the bid amount will get blocked in your bank account. Click here to learn more.

How to check the allotment status for Zaggle Prepaid Ocean Services Limited IPO?

You can check the allotment status for the Zaggle Prepaid Ocean Services Limited IPO on the website of the Registrar and Transfer agent. Alternatively, you can also check the allotment status on the NSE website.