Zaggle Prepaid Ocean Services IPO GMP (Grey Market Premium)

Zaggle Prepaid Ocean Services IPO worth ₹563.38 crore comprises of an offer for sale and also of a fresh issue of shares. The offer for sale (OFS) component is by the promoters and early shareholders of the company. Here it must be noted that while the fresh issue component infuses fresh funds into the company, it also is EPS dilutive and equity dilutive. On the other hand, the OFS is just a transfer of shares so there is no fresh infusion of funds, but it also does not dilute the equity. The issue has been priced in the band of ₹156 to ₹164 per share and the IPO allotment price will be discovered post the book building of shares being completed during the IPO process. For our analysis, the upper end of the band is assumed.

Details of the Zaggle Prepaid Ocean Services IPO

Let us now look at the details of the issue of Zaggle Prepaid Ocean Services IPO. The fresh issue portion comprises the issue of 2,39,02,439 shares (2.39 crore shares approximately), which at the upper price band of ₹164 per share will translate into fresh issue size of ₹392 crore. The offer for sale (OFS) portion of the IPO comprises the sale of 1,04,49,816 shares (1.045 crore shares), which at the upper price band of ₹164 per share will translate into an offer for sale (OFS) size of ₹171.38 crore. Therefore, the overall IPO of Zaggle Prepaid Ocean Services Ltd will comprise of the issue of 3,43,52,255 shares (3.44 crore shares approximately), which at the upper price band of ₹164 per share will translate into a total IPO issue size of ₹563.38 crore.

The issue opens for subscription on 14th September 2023 and closes for subscription on 18th September 2023 (both days inclusive). The basis of allotment will be finalized on 22nd September 2023 and the refunds will be initiated on 25th September 2023. In addition, the demat credits are expected to happen on 26th September 2023 and the stock will list on 27th September 2023 on the NSE and the BSE. Zaggle Prepaid Ocean Services Ltd has conducted the anchor bidding and allotment to anchor investors a day ahead of the IPO opening, on 13th September 2023 and it got 45% anchor allocated.  

Understanding the Zaggle Prepaid Ocean Services IPO GMP

The grey market price (GMP) trading normally starts about 4-5 days prior to IPO opening and continues till the listing date. In the case of Zaggle Prepaid Ocean Services Ltd , we already have GMP data for the last 5 days, which should give a reasonable picture of the likely listing performance.

There are 2 factors that impact the GMP. Firstly, the market conditions have a deep impact on the GMP, which includes the levels of the Nifty and Sensex as well as the general IPO market and macro conditions. Secondly, the extent of subscription for the IPO across the retail and the QIB segments also has a deep impact on the GMP as it is indicative of investor interest in the stock. Generally, strong QIB subscription is a trigger for a spike in GMP.

There is one small point to remember here. The GMP is not an official price point, just a popular informal price point. However, in most cases, it has been observed to be a good informal gauge of demand and supply for the IPO. Hence it does give a broad idea of how the listing is likely to be and how the post-listing performance of the stock would be.

GMP tends to be a good mirror of the real stock story. More than the actual price, it is the GMP trend over time that gives insights about which direction the wind is blowing.

GMP price colour of Zaggle Prepaid Ocean Services Ltd

Here is a quick GMP summary for Zaggle Prepaid Ocean Services IPO for which the data is available.

In the above case, the GMP trend shows that the grey market premium has opened at around ₹36, and now its down at ₹11. However, it must be remembered that initially the stock was trading in the grey market without the price band for the IPO being announced. The price band was just announced few days ago and even after that the GMP quotes were not too active. However, the GMP level is still indicative of moderate to strong traction for the IPO grey market price. Of course, we have to await for the actual subscription numbers to flow in after the issue opens for subscription on 14th September 2023, as that would have a very significant impact on the GMP. In the past, stocks which got oversubscribed in the IPO also saw a very robust positive shift in the grey market pricing. For a start, Zaggle Prepaid Ocean Services Ltd  has shown moderate to strong traction in the grey market.

If you consider the upper end of the price band of Zaggle Prepaid Ocean Services Ltd  at ₹164 as the indicative price, then the likely listing price is being signalled at around ₹200 per share as of the GMP indicator on 14th September 2023. One data point to track will be the subscription update on the stock as that would chart the GMP course from here. As mentioned, the institutional QIB subscription is a key trigger for the GMP pricing.

The GMP of ₹36 on a likely upper band pricing of ₹164 indicates a listing premium of a moderate to healthy 21.95% for Zaggle Prepaid Ocean Services Ltd  over the listing price. That pre-supposes a listing price of approximately ₹200 per share, when Zaggle Prepaid Ocean Services Ltd  lists on 27th September 2023. Of course, these are approximations, so you must keep a margin of safety. However, from here on, a lot will depend on the GMP sustaining over the next few days after the issue opens, as well as the subscription flow into the company IPO.

GMP (grey market price) is an important indicator, albeit informal, of likely listing price. One cannot take this price at face value However, the GMP tends to be quite dynamic and changes direction with the flow of news and events. Investors must note here that this is just an informal indication and has no official acceptance. The best thing one can do with the GMP is to observe the trend closely as that gives the best hints on listing status. Focus on the time series trend than on numbers.

Also read about Zaggle Prepaid Ocean Service IPO

Brief on Zaggle Prepaid Ocean Services Ltd business model

Zaggle Prepaid Ocean Services Ltd, was incorporated in 2011 to provide fintech products and services to manage corporate business expenses. These are managed through automated and innovative workflows designed for such specific needs. Zaggle Prepaid Ocean Services Ltd offers fintech and SAAS (software as a service) products to corporates in the field of banking, fintech, healthcare, FMCG, automobiles, infrastructure, industrial manufacturing etc. The SAAS platform of Zaggle Prepaid Ocean Services Ltd is designed with 3 broad intents in mind. First and foremost, it helps in business spend management; and this includes managing of expenses and of vendors. Secondly, the platform also manages a very efficient and effective rewards and incentives program meant for employees and channel partners based on performance. Lastly, the SAAS platform also handles gift card management for merchants, which broadly falls under customer engagement management. The company has an impressive roster of clients which, inter alia, includes Tata Steel, Persistent Systems, Inox, Pitney Bowes, Wockhardt, Mazda, Philips Carbon Black (PCBL), Hiranandani Group, Greenply Industries and Cotiviti.

The product portfolio of Zaggle Prepaid Ocean Services Ltd comprises of various focused solutions for corporates. The Propel Platform is a SAAS platform for channel rewards and incentives management as well as for employee recognition. The SAVE SAAS based platform also offers a mobile application for digitized expense management, digitized authentication, and employee reimbursements. The Customer Engagement Management Services (CEMS) system enables merchants to manage their entire gamut of customer experience under a single umbrella platform. Zaggle Prepaid Ocean Services Ltd also offers the Zaggle payroll card which is a pre-paid card that allows customers to pay contractors, temporary employees, and contract workers as an alternative to cash or bank payments. Lastly, the Zoyer is an integrated data driven SAAS platform that offers spend management with automated finance capabilities.

The fresh funds raised by the company will be for customer acquisition and customer retention as well as spending on technology stack and new products. The IPO will be lead managed by ICICI Securities, Equirus Capital, IIFL Securities and JM Financial. KFIN Technologies will be the registrar to the IPO.