Zaggle-Prepaid-Ocean-Services-Limited-ipo-elitewealth

Zaggle Prepaid Ocean Services IPO Company Profile:

Zaggle Prepaid Ocean Services Limited (“ZPOSL”) is a leading player in spend management, with a differentiated value proposition and diversified user base. Incorporated in 2011, the company operates in a segment where it interacts and interfaces with the Customers and end Users (i.e., employees) and is among a small number of uniquely positioned players with a diversified offering of financial technology (“fintech”) products and services, having one of the largest numbers of issued prepaid cards in India in partnership with certain of the company’s banking partners which is 12.7% of the country’s total prepaid transaction value as of March 31, 2022, a diversified portfolio of software as a service (“SaaS”), including tax and payroll software, and a wide touchpoint reach.

ZPOSL is sector-agnostic, and its network of corporate customers (“Customers”) covers the banking and finance, technology, healthcare, manufacturing, FMCG, infrastructure, and automobile industries, among others, where it has 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.


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    ZPOSL is placed at the intersection of the SaaS and fintech ecosystems, and its SaaS platform is designed for:

    • Business spend management (including expense management and vendor management);
    • Rewards and incentives management for employees and channel partners; and
    • Gift card management for merchants, which the company refers to as a customer engagement management system (“CEMS”)

     

    Zaggle Prepaid Ocean Services IPO Portfolio :

    • Propel: Propel is a corporate SaaS platform for channel rewards and incentives, employee rewards and recognition;
    • Save: Save is 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: CEMS is 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: Zaggle Payroll Card is a prepaid payroll card that allows ZPOSL’s 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; and
    • Zoyer: Zoyer is an integrated data-driven, SaaS-based business spend management platform with embedded automated finance capabilities in the core invoice-to-pay workflows.

    ZPOSL’s SaaS offerings (comprising Propel, Save, CEMS, and Zoyer) for businesses include business and employee spend management, employee benefits management, employee incentives, channel rewards and incentives, employee rewards and recognition, and employee tax benefits. The company combines its unified SaaS-based platform with a comprehensive product stack that digitizes business and employee spend management and rewards for businesses, along with its offering of payment instruments, such as the Zaggle Payroll Card, Kuber Gift Card (a gift card that works at both online and offline outlets where Visa cards are accepted in India) and Zinger Multi-wallet Card (a reloadable card with multiple wallets that works at both online and offline outlets where Visa cards are accepted in India)

    Zaggle Prepaid Ocean Services IPO Details:

    IPO Open Date Not Available
    IPO Close Date Not Available
    Listing Date Not Available
    Face Value ₹1 per share
    Price Not Available
    Lot Size Not Available
    Issue Size Not Available
    Fresh Issue [●] shares

    (aggregating up to ₹490 Cr)

    Offer For Sale 10,526,316 shares

    (aggregating up to ₹[●] Cr)

    Issue Type Book Built Issue IPO
    Listing At BSE, NSE
    QIB Shares Offered Not more than 75% of the Offer
    NII (HNI) Shares Offered Not less than 15% of the Offer
    Retail Shares Offered Not less than 10% of the Offer
    Promoters Raj P Narayanam and Avinash Ramesh Godkhindi

    Zaggle Prepaid Ocean Services IPO Financial Analysis:

    Particulars 3M of FY-23(in cr.) FY-22(in cr.) FY-21(in cr.) FY-20(in cr.) CAGR
    Revenue from Operations 88.62 371.26 239.97 68.33 75.8%
    Other Income 0.04 0.41 0.33 0.03  
    Cost of Goods Sold 36.35 145.29 31.18 9.03 152.5%
    Employee Cost 6.19 15.43 12.46 10.55  
    Other expenses 35.25 150.69 168.70 37.65  
    EBITDA 10.87 60.26 27.95 11.13 75.6%
    EBITDA margin% 12.26% 16.23% 11.65% 16.29%  
    Depreciation 0.84 2.10 2.05 1.88  
    Interest 1.44 6.99 7.71 4.48  
    PBT 8.58 51.18 18.20 4.77 120.5%
    Total tax 2.28 9.26 -1.13 1.05  
    PAT 6.30 41.92 19.33 3.72 124.2%
    PAT margin% 7.11% 11.29% 8.06% 5.44%  

     

    Zaggle Prepaid Ocean Services IPO Revenue from Operations:

    Segment 3M of FY-23(in cr.) % FY-22(in cr.) % FY-21(in cr.) % FY-20(in cr.) % CAGR
    Program fee 40.75 45.98% 200.70 54.06% 195.49 81.47% 53.55 78.36% 55.3%
    Propel platform revenue / Gift Card 41.31 46.61% 153.92 41.46% 31.55 13.15% 6.50 9.51% 187.1%
    Platform fee / SaaS fee / Service fee 6.57 7.41% 16.63 4.48% 12.92 5.39% 8.29 12.13% 26.1%
    Total 88.62 100.00% 371.26 100.00% 239.97 100.00% 68.33 100.00% 75.8%

    Major Shareholders  Zaggle Prepaid Ocean Services IPO:

    S.NO. Name of the Shareholder No. of Shares % of pre-Offer shareholding
    1 Raj P Narayanam 47,685,000 51.71%
    2 Zuzu Software Services Private Limited 17,476,992 18.95%
    3 Avinash Ramesh Godkhindi 9,180,000 9.95%
    4 VenturEast Proactive Fund LLC 5,870,100 6.37%
    5 GKFF Ventures 4,243,200 4.60%
    6 Sudhakar Tirunagari 1,887,000 2.05%
    7 Abhay Deshpande Raosaheb 1,450,440 1.57%
    8 VenturEast SEDCO Proactive Fund LLC 1,116,900 1.21%
      Total 88,909,632 96.41%

    Selling Shareholders of Zaggle Prepaid Ocean Services IPO:

    S.NO. Name of the Shareholder No. of Shares % of pre-Offer shareholding
    1 Raj P Narayanam 47,685,000 51.71%
    2 Avinash Ramesh Godkhindi 9,180,000 9.95%
    3 VenturEast Proactive Fund LLC 5,870,100 6.37%
    4 GKFF Ventures 4,243,200 4.60%
    5 VenturEast SEDCO Proactive Fund LLC 1,116,900 1.21%
    6 Ventureast Trustee Company Private Limited (acting on behalf of Ventureast Proactive Fund) 244,800 0.27%
    7 Zuzu Software Services Private Limited 17,476,992 18.95%
    8 Koteswara Rao Meduri 183,600 0.20%
    9 Malvika Poddar 76,500 0.08%
      Total 86,077,092 93.34%

    Zaggle Prepaid Ocean Services IPO Offer for Sale Details:

    S. No. Name of the Selling Shareholder Number of Equity Shares

    being offered in the Offer for Sale (Up to)

    1. Raj P Narayanam 1,529,677 Equity Shares
    2. Avinash Ramesh Godkhindi 1,529,677 Equity Shares
    3. VenturEast Proactive Fund LLC 2,830,499 Equity Shares
    4. GKFF Ventures 2,046,026 Equity Shares
    5. VenturEast SEDCO Proactive Fund LLC 538,557 Equity Shares
    6. Ventureast Trustee Company Private Limited (acting on behalf of Ventureast Proactive Fund) 118,040 Equity Shares
    7. Zuzu Software Services Private Limited 1,765,540 Equity Shares
    8. Koteswara Rao Meduri 91,800 Equity Shares
    9. Malvika Poddar 76,500 Equity Shares

    Zaggle Prepaid Ocean Services IPO Strengths:

    • Differentiated SaaS-based fintech platform, offering a combination of payment instruments, mobile applications, and API integrations. ZPOSL’s ecosystem allows for parties with complementary services to connect, creating a network effect for businesses, employees, channel partners, customers, merchants, and banks

    • ZPOSL is among the few uniquely positioned players offering diversified services with fintech products and services and has the advantages of having one of the largest numbers of issued prepaid cards in partnership with certain of its banking partners and high profitability along with a diversified portfolio of SaaS services (including for tax and payroll) and a wide touchpoint reach

    • ZPOSL’s experience and expertise have helped it develop strong relationships with Customers over a long period of time. As of June 30, 2022, the company had 1,896 Customers in India with varying sizes, User 144 bases, operating histories, sectors, and annual turnovers. Some of the well-known Customers include Tata Steel, Wockhardt, Pitney Bowes, AON, Inox, and PCBL.

    • ZPOSL’s model is a key differentiator which implements the strategy of acquiring large User bases through corporate and SMB Customers that enables it to limit its costs incurred on the acquisition of new Users relative to other B2C/retail focused players.

    • ZPOSL has diversified customer relationships across sectors along with preferred banking and merchant partnerships. The company has been successful in developing relationships with some well-known names. It has been serving some of these Customers since 2013. As of June 30, 2022, it had more than 1.98 million active Users with 460 SMB accounts and 1,436 corporate accounts. The Customer base as of June 30, 2022 was 119.12% higher than the company’s Customer base as of March 31, 2021 of 904,713 active Customers. The Customer base as of March 31, 2021 was 185.90% higher than the Customer base as of March 31, 2020 of 316,440 active Customers.

    • ZPOSL has a strong customer retention capability with the churn rate for Customers terminating their contracts with it being consistently low at 1.37%, 0.37%, 1.17% and nil% in the three-month period ended June 30, 2022 and in Fiscals 2022, 2021 and 2020, respectively. With the company’s integrated offerings, it has been successful in reducing the negative impact of low switching costs associated with a SaaS business. The company had a customer retention rate of at least 95% during the three-month period ended June 30, 2022 and in the Fiscals 2022, 2021 and 2020. The ability to offer Customers subscription-based services helps provide a recurring revenue stream.

    Zaggle Prepaid Ocean Services IPO Risk Factors:

    • ZPOSL may be unable to retain existing customers, attract new Customers, convert Customers using the beta or trial versions into paying customers, or expand usage of the products within or across Customer organizations.

    • A substantial portion of ZPOSL’s revenue is generated by Program Fees through the arrangements with its banking partners. The businesses of its banking partners are regulated by the RBI and any change in the RBI’s policies, decisions and regulatory framework could adversely affect the business, cash flows, results of operations and financial condition.

    • ZPOSL recognise revenue over the term of the contracts with its Customers. Consequently, downturns in sales may not be immediately reflected in its operating results until one or more quarters following the actual decrease in sales.

    • ZPOSL’s business model and diversified product offerings makes its business such that there are no industry peers listed in India or abroad which are of comparable size, belong to the same industry and follow a similar business model. Consequently, there is limited information in the public domain about its peers and it may be difficult to benchmark and evaluate the financial performance against other operators who operate in the same industry as the company.

    • India’s spend management market and the fintech space is rapidly evolving, is increasingly competitive, fragmented, and subject to changing technology, shifting user and customer needs, new market entrants, and frequent introductions of new products and services. ZPOSL competes with a number of companies that range in size from large and diversified enterprises with significant financial resources to smaller companies. The market for its products is rapidly evolving and highly competitive and in the future there may likely be an increasing number of similar products offered by additional competitors

    Objects of the Offer:

    ZPOSL proposes to utilise the Net Proceeds towards funding of the following objects:

    • Expenditure towards Customer acquisition and retention
    • Expenditure towards development of technology and products
    • Repayment/ pre-payment of certain borrowings, in full or part, availed by the Company
    • General corporate purposes

    Zaggle Prepaid Ocean Services Limited IPO Prospectus:

    Registrar to the offer:

    KFin Technologies Limited

    Telephone: +91 40 6716 2222

    E-mail: zaggle.ipo@kfintech.com

    Website: www.kfintech.com

    Investor grievance e-mail: einward.ris@kfintech.com

    Contact person: M Murali Krishna

    SEBI registration no.: INR000000221