Zinka Logistics Solutions with a 2.9% premium will later fall into the red: should you hold, sell or buy?

Latest update:November 22, 2024 10:43 AM EST

Zinka Logistics Solutions IPO Listing: The shares were listed on NSE at Rs 280.90 per share, 2.89% higher than the IPO issue price of Rs 273.

Listing of Zinka Logistics Solutions at IPO.

Zinka Logistics Solutions IPO listing: Zinka Logistics Solutions Ltd (or BlackBuck Ltd) received positive listing on the major stock indices BSE and NSE on Friday. The shares were listed on NSE at Rs 280.90 apiece, up 2.89% from the IPO issue price of Rs 273. The stock later turned red, falling 8.98% to Rs 260.2 apiece from its day’s high. at 285.9 rupees per piece.

On the BSE, the shares were quoted at Rs 279.05 per piece, up 2.21 percent from the issue price.

The IPO was initially listed on Thursday, but the listing was later pushed back to Friday. As per the norms, a company is required to list its shares within three days of the closing date of the IPO (T+3).

The listing gain comes after GMP has indicated a flat or negative listing for the IPO.

The initial public offering of digital platform for truck operators, Zinka Logistics Solutions Ltd, was opened for subscription between 13 and 18 November. The Rs 1,100 crore IPO was subscribed 1.87 times, receiving bids for 4,19,43,258 shares against Rs 2.19 lakh crore. There are 24,70,786 shares available for sale.

IPO Zinka Logistics Solutions: what should investors do?

Shivani Nyathi, Head of Wealth, Swastika Investmart Ltd said, “While the positive listing is encouraging, it is imperative for investors to conduct thorough due diligence and assess the long-term growth prospects of the company…. Investors should remain cautious due to the company’s past financial problems, including losses and negative cash flow, as well as ongoing legal issues.”

The company’s strong network effect and position as a leading platform in the logistics industry likely contributed to the positive listing, she said.

IPO Zinka Logistics Solutions: more details

Zinka Logistics Solutions has raised over Rs 501 crore from anchor investors a day before its first public offering.

The IPO is a combination of a fresh issue of shares worth Rs 550 crore and an offer for sale (OFS) of up to 2.06 crore shares. The OFS of promoters and selling shareholders is valued at Rs 565 crore, which is at the upper end of the price range.

Employees eligible to bid for employee reservation were offered a discount of Rs 25 per share.

Proceeds from the new issue of Rs 200 crore will be used for sales and marketing initiatives; Rs 140 crore for investment in Blackbuck Finserve to fund capital base support to meet future capital requirements; Rs 75 crore to fund product development costs and a portion will be used for general corporate purposes.

Zinka Logistics aims to transform the trucking industry in India by empowering truck operators with digital capabilities to manage their businesses and increase their revenues. The company’s BlackBuck app serves as an end-to-end platform providing solutions for payments, telematics, load management and vehicle finance.

The Bengaluru-based firm processed gross transaction value (GTV) of Rs 5,356.20 crore and Rs 17,396.19 crore in payments for the three months ended June 30, 2024 and FY 2024, respectively. The payment platform covers significant costs for truck operators, such as tolls and fuel.

The company has partnered with FASTag banks and several oil marketing companies (OMCs) to offer efficient and secure tolling and refilling solutions, generating revenue through commissions based on transaction value.

For the three months ended June 2024, the company’s revenue from continuing operations stood at Rs 92.17 crore and profit after tax stood at Rs 28.67 crore.

The lead managers for the issue are Axis Capital, Morgan Stanley India Company, JM Financial and IIFL Capital Services.