Zaggle Prepaid Ocean Services IPO Review – GMP, Details, Price & More

Zaggle Prepaid Ocean Services IPO Review: Zaggle Prepaid Ocean Services is coming with its Initial Public Offering and it will be listed on NSE and BSE. The IPO will be open for subscription on September 14, 2023, and closes on September 18, 2023.

In this article, we will look at Zaggle Prepaid Ocean Services IPO review, analyze the company, look at its strengths and weaknesses and see what unfolds.

Zaggle Prepaid Ocean Services IPO – About the Company

Zaggle Prepaid Ocean Services, incorporated in 2010, offers a diversified range of fintech and SaaS products and services.

The company is one of the leading players 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 SaaS platform is intended for Business Spend Management (including expense management and vendor management), employee and channel partner rewards and incentives management, and merchant gift card management, which the company refers to as Customer Engagement Management System (CEMS).

The company had 2,411 Customers in India as of March 2023, its network of corporate customers covers the banking and finance, technology, healthcare, manufacturing, FMCG, infrastructure and automobile industries.

Key customers of the company

It has relationships with brands such as TATA Steel, Persistent Systems, Vitech, Inox, Pitney Bowes, Wockhardt, PCBL, Hiranandani Group, Cotiviti and Greenply Industries. 

Products/Services provided by the company

1. Propel – It is a corporate SaaS platform for channel rewards and incentives, employee rewards and recognition.
2. Save – It 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.
3. Zaggle Payroll Card – It is a prepaid payroll card that allows its 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.
4. Zoyer – It is an integrated data-driven, SaaS-based business spend management platform with embedded automated finance capabilities in the core invoice to pay workflows
5. CEMS – The customer engagement management system(CEMS) enables merchants to comprehensively manage their customer experiences including rewarding them through gift card and loyalty benefits
6. Zakey – Zakey is a contactless payment device in the form of a key fob, through Zakey, Users can make cashless and contactless payments
7. ZatiX –  ZatiX is an analytics platform, which helps businesses to bring in greater cost efficiencies.

Zaggle Prepaid Ocean Services IPO Review – Industry Overview

The following are the overviews of some of the different segments the company operates in:

Fintech Market

India’s fintech ecosystem has grown rapidly and its market revenue is estimated to reach approximately ₹8,341.0 billion in Fiscal 2027 as a result of supporting government policies that have fostered a cashless society and rising investments. India had the highest fintech adoption rate of 87.0% in Fiscal 2023, compared to other countries

Digital Payments

India has the fastest-growing digital payments industry in the world. In Fiscal 2022, UPI was expected to account for 86.0% of all consumer payments. With the huge increase in UPI traffic, it is forecasted that digital payments from consumers to merchants are on track to reach 1,575% in Fiscal 2022 from Fiscal 2018. 

Spend Market

The overall market for spend management software and services was estimated to surpass ₹200 billion by Fiscal 2027, with the share of outsourced spend management estimated to be around 60.0% during that period.

India’s spend management software and services market is dominated by the software segment, with a share of approximately 75% in 2023

 Prepaid Card Market

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. 

Zaggle Prepaid Ocean Services IPO Review – Financials

If we look at the financials of Zaggle Prepaid Ocean Services it has reported assets worth 62.09 Cr in FY21 on a standalone basis and 234.75 Cr in FY23 on a consolidated basis.

In FY21 and FY23 the company generated revenue of 240.29 Cr on a standalone basis and 554.58 Cr on a consolidated basis. The rise in revenue is accompanied by increasing profits, which has increased from 19.33 Crore to 22.90 Cr.

The company’s profits have grown only at a rate of ~20% while the company’s revenue has increased by 2.3 times, though the company is generating good revenue, it is only able to achieve and maintain net profit margins of approximately <12% in the past 3 years.

In terms of return ratios, in FY23 it had an ROE of 46.98% and a RoNW of 46.98%. 

The company reported a Debt-to-equity ratio of 2.48% in FY23 which indicates a high level of debt in the company. So we can conclude that the company is not able to generate good net profit margins due to a high level of debt and other costs.

Financial Metrics

(Source: RHP of the company)

Competitors of Zaggle Prepaid Ocean Services 

The company does not have any listed direct competitors or peers in India. However here are a few companies listed in the RHP as its competitors: Zaggle, Divvy, Brex, Pleo, Ramp, Coupa, Expensify, Fleetcor, Edenred, Wex and Happay.

Strengths of the Company

• The company has a differentiated SaaS-based fintech platform, offering a combination of payment instruments, mobile applications and API integrations to satisfy multiple needs of customers as per their preferences.
• The company has In-house developed technology and a strong network base.
• The company has developed a strong business model with diverse sources of revenue, and low customer acquisition and retention costs.
• The company has Diversified customer relationships across sectors, along with preferred banking and merchant partnerships.

Weaknesses of the Company

• The company’s recent revenue growth rates may not be indicative of its future financial performance as it has a limited operating history at the current scale. Failure to effectively manage its growth could materially and adversely affect the success of the business and/or impact its margins and profitability.
• The company may be unable to retain all the existing customers, as the company’s business is subscription-based and the existing customers are not obligated to stay after the subscription expires.
• Any termination of, or failure to maintain, its relationships with its banking partners, including the Preferred Banking Partners, or any changes to its interchange fees due to a variety of factors, could adversely affect the business.
• The company is dependent on third-party Payment Networks, channel partners and third-party providers for various aspects of its business and growth, and any failure to maintain these relationships could adversely affect the business.

Zaggle Prepaid Ocean Services IPO Review – GMP

We will update the article once the GMP is out.

Zaggle Prepaid Ocean Services IPO – Key IPO Information

Promoters: Mr. Raj P Narayanam and Mr. Avinash Ramesh Godkhindi

Book Running Lead Managers: ICICI Securities Ltd, Equirus Capital Private Limited, IIFL Securities Limited, JM Financial Limited

Registrar to the Issue: KFin Technologies Limited

The Objective of the Issue

The Company intends to utilize the Net Proceeds towards funding of the following objects

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

In Closing

In this article, we looked at Zaggle Prepaid Ocean Services IPO Review.

Through this article, we can see that the company has achieved good growth in recent times and has good potential to further progress in the future provided it increases its product offerings that give consistent and fixed income and maintains/increases good relationships with the customers.

What do you think the future holds for the company, do you believe the company can reach greater heights? Are you applying for this IPO? Let us know in the comments below.

Written by Bharath K.S

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