Zinka Logistics’ IPO: Your 10x Return Secret Revealed

BlackBuck IPO Opens for Subscription

Zinka Logistics’ IPO: Your 10x Return Secret Revealed BlackBuck, owned by Zinka Logistics Solution, is set to launch its IPO for public subscription from Wednesday, November 13, 2024, through Monday, November 18, 2024. The company’s shares are trading at a premium of Rs 24 in the grey market, indicating strong investor interest, with a grey market premium (GMP) of 8.79% above the IPO’s upper price band.

Key IPO Details:

– IPO Size: BlackBuck aims to raise Rs 1,114.72 crore through a mix of new shares and an Offer for Sale (OFS) by existing stakeholders. Promoters, including Rajesh Kumar Naidu Yabaji, Ramasubramanian Balasubramaniam, and Chanakya Hridaya, as well as investors such as Accel India IV (Mauritius) and International Finance Corporation, will partially divest their stakes.

– Price Band and Lot Size: The IPO is priced at Rs 253-273 per share, with a minimum bid of 54 shares, requiring Rs 14,742 for a single lot. For Small Non-Institutional Investors (sNII), the minimum bid is 756 shares (14 lots) totaling Rs 206,388, while for Big Non-Institutional Investors (bNII), the minimum is 3,672 shares (68 lots) amounting to Rs 1,002,456.

– Timeline: The IPO closes on November 18, with allotment finalized by November 19 and shares expected in investors’ demat accounts on November 20. BlackBuck’s BSE and NSE listing is anticipated on November 21.

Objective and Financials:

Zinka Logistics’ IPO: Your 10x Return Secret Revealed Proceeds from the fresh issue will fund BlackBuck’s marketing initiatives, product development, and capital infusion into its NBFC arm, BlackBuck Finserve. Notably, BlackBuck’s revenue from operations reached Rs 92.16 crore in Q2FY25, marking significant growth over the prior year’s Rs 59.46 crore in the same period. While the company achieved a net profit of Rs 28.67 crore in Q2FY25, it had reported losses in FY24 and FY23.

About BlackBuck:

Zinka Logistics’ IPO: Your 10x Return Secret Revealed BlackBuck, a leading digital platform for truck operators in India, provides services such as payments, telematics, a freight marketplace, and vehicle financing, with the goal of streamlining operations and advancing the logistics sector through technology.

Zinka Logistics’ IPO: Your 10x Return Secret Revealed Zinka Logistics Solutions, India’s largest digital platform for truck operators, is preparing to open its IPO for subscription from November 13 to November 18, 2024. This will be the fifth IPO this month, following those by Sagility India, Swiggy, ACME Solar Holdings, and Niva Bupa Health Insurance Company. Here are ten important points to consider before investing in the IPO.

1) IPO Date

The IPO is open to all investor types from November 13 to November 18. The anchor book, reserved for institutional investors, will open on November 12.

2) Price Band

The price range for shares is set at Rs 259-273 per equity share.

3) IPO Size

Zinka aims to raise Rs 1,114.72 crore, with Rs 550 crore from new shares and Rs 564.72 crore through an Offer for Sale (OFS). Promoters Rajesh Kumar Naidu Yabaji, Chanakya Hridaya, and Ramasubramanian Balasubramaniam, along with institutional investors like Accel India and IFC, will sell shares through the OFS. Zinka has also reserved 26,000 shares for employees at a Rs 25 discount.

4) Objectives of Issue

Zinka plans to allocate Rs 200 crore toward sales and marketing, Rs 75 crore for product development, and Rs 140 crore to strengthen the capital base of its NBFC subsidiary, BlackBuck Finserve. The remaining funds will support general corporate purposes. Proceeds from the OFS will go to the selling shareholders.

5) Lot Size

Investors can bid in multiples of 54 shares, with the minimum investment for retail investors at Rs 14,742. Retail investors can invest up to Rs 1,91,646 for a maximum of 702 shares (13 lots), given the Rs 2 lakh investment cap. Zinka has allocated 75% of the IPO for institutional investors, 10% for retail, and 15% for non-institutional investors.

6) Company Profile

Zinka’s BlackBuck platform connects over 9.63 lakh truck operators, representing 27.52% of India’s truck operators, according to Redseer. The platform offers digital services like toll and fuel payment management, driver and fleet monitoring, load searching, and financing for used vehicle purchases. Revenue comes from commission margins based on transaction values. Zinka collaborates with FASTag banks and oil companies for tolling and fueling.

7) Financial Performance

Zinka reduced its net loss from Rs 236.8 crore in FY23 to Rs 167 crore in FY24, with EBITDA losses narrowing from Rs 232.5 crore to Rs 158.4 crore. Revenue rose by 69% in FY24 to Rs 297 crore, driven by increased commission, subscription, and service fees. For the April-June 2024 quarter, the company recorded Rs 32.4 crore in profit, helped by exceptional gains of Rs 25.6 crore. Gross transaction value rose by 42.66% in FY24 to Rs 17,396.2 crore, with further growth in Q1FY25.

8) Shareholding Pattern

Promoters hold 34.32% of BlackBuck, with the remaining 65.68% owned by public shareholders. Major institutional investors include Accel, Sands Capital, and IFC. Rajesh Kumar Naidu Yabaji serves as Chairman, Managing Director, and CEO; Chanakya Hridaya is COO; and Ramasubramanian Balasubramaniam heads New Initiatives.

9) Risks and Concerns

Zinka has experienced negative operating cash flow, relies heavily on business partners for payments and financing, and derives 94.53% of its revenue from payments and telematics. Declines in commission income, challenges in retaining or attracting new truck operators, fuel price fluctuations, and changes in road transport can impact operations. Additionally, high employee turnover poses a risk, with attrition rates of 37.32% in Q1FY25 and 41.08% in FY24.

10) GMP (Grey Market Premium)

The basis of allotment will be finalized by November 19, with shares credited to successful bidders’ accounts by November 21. Trading on the BSE and NSE is expected to start on November 22. Grey market data shows Zinka shares trading at a 9-10% premium over the upper price band, reflecting positive sentiment. The IPO’s book-running lead managers are Axis Capital, Morgan Stanley India, JM Financial, and IIFL Capital Services.