Zinka Logistics IPO Subscribed 24% On Day One As Employees Lead Demand— Check GMP

The initial public offering of Zinka Logistics Solutions Ltd., the parent of digital trucking solutions platform Blackbuck, has been subscribed 24% on its first day of bidding on Wednesday.

The grey market premium of Blackbuck was nil as of 7:00 p.m., implying no gains over the IPO price, according to Chittorgarh's unit InvestorGain. The estimated listing price based on the GMP is Rs 273 per share.

This sees a slip from the GMP of Rs 24 on Nov. 11, which implied an 8.79% gain over the listing price.

The company has set a price band of Rs 259-273 per share for its Rs 1,114.7-crore IPO, which consists of a fresh issue of shares worth Rs 550 crore, and an offer for sale of up to Rs 565 crore, according to the red herring prospectus filed with the Securities and Exchange Board of India.

In the OFS portion, promoters Rajesh Kumar Naidu Yabaji, Ramasubramanian Balasubramaniam, and Chanakya Hridaya will sell a combined 44.38 lakh shares, along with other investors such as Accel India IV, Peak XV Partners, and the International Finance Corporation.

Axis Capital Ltd., Morgan Stanley India Co., JM Financial Ltd. and IIFL Securities Ltd. are the book running lead managers of the BlackBuck IPO, while KFin Technologies Ltd. is the registrar for the issue.

• Issue opening date: Nov. 13.

• Issue closing date: Nov. 18.

• Issue price: Rs 259-273 per share.

• Fresh issue size: Rs 550 crore.

• OFS size: Rs 565 crore.

• Total issue size: Rs 1,114.7 crore.

• Market value at the upper end of price band: Rs 4,818 crore.

• Lot size: 54 shares.

Proceeds from the issue will be used for:

• Funding towards sales and marketing costs: Rs 200 crore.

• Investment in Blackbuck Finserve Pvt.: Rs 140 crore.

• Funding of expenditure in relation to product development: Rs 75 crore.

Zinka Logistics is the parent of digital trucking services platform Blackbuck, which is backed by Flipkart. It offers a variety of digital logistics services, including vehicle financing, fuel cards, FASTag services, and a marketplace connecting truck operators with businesses in need of transportation services.

Founded in 2015, BlackBuck entered the unicorn club in 2021, having raised over $350 million to date. The company has around 9.63 lakh customers on its platform.

As of Aug. 31, 2024, the company's outstanding borrowings on a consolidated basis aggregated to Rs 151.53 crore, as per their red herring prospectus.

For the year ended March 31, 2024, the company reported revenue from operations of Rs 296.92 crore and a loss of Rs 193.95 crore. In comparison, for the year ended March 31, 2023, revenue was Rs 175.68 crore, while the loss stood at Rs 290.50 crore.

As of Aug. 31, 2024, the company's outstanding borrowings on a consolidated basis amounted to Rs 15.15 crore, according to its Red Herring Prospectus.

• Revenue dependency on partners: The company relies heavily on business partners for its payments and vehicle financing offerings. The loss of key partners could significantly impact financial performance.

• Core revenue from payments and telematics: Payments and telematics offerings contribute around 93% of total revenue. Any downturn in these areas could materially harm the company's financial health.

• Revenue from commissions and subscriptions: Commission income (41%) and subscription fees (39%) make up a substantial portion of revenue. Fluctuations in these income streams could negatively affect business performance.

• Risks in vehicle financing: The company's relatively new vehicle financing offering exposes it to risks from high-risk borrowers and challenges with collateral recovery.

• Limited experience in vehicle financing: With limited expertise in vehicle financing, the company faces difficulties in predicting industry risks, which could have adverse consequences on its operations and financial condition.

The IPO was subscribed 0.24 times, or 24%, as of 5:00 p.m. on Wednesday.

• Qualified institutional buyers: 0.26 times or 26%.

• Non-institutional investors: 0.02 times or 2%.

• Retail investors: 0.51 times or 51%.

• Portion reserved for employees: 3.24 times.

The grey market premium of Blackbuck was nil as of 11:29 a.m., implying no gains over the IPO price, according to Chittorgarh's unit InvestorGain. The estimated listing price based on the GMP is Rs 273 per share.

This sees a slip from the GMP of Rs 24 on Nov. 11, which implied a 8.79% gain over the listing price.

GMP is not an official price quote for the stock and is based on speculation. 

Disclaimer: Investments in initial public offerings are subject to market risks. Please consult with financial advisors and read the red herring prospectus thoroughly before placing bids.