Zinka Logistics Solution IPO Good or Bad - Detailed Review
10 November 2024
8 min read
00:00 / 00:00
Zinka Logistics Solution Limited is kicking off its initial public offering which will be open from November 13, 2024, to November 18, 2024. While considering applying for this IPO, certain questions may arise, including whether Zinka Logistics Solution IPO is good or bad, whether it is worth investing in this IPO, and so on.
This article provides a comprehensive Zinka Logistics Solution IPO review, diving into its business operations and fundamental analysis to help you make a well-informed investment decision.
Zinka Logistics Solution IPO - Company Overview
Founded in 2015, Zinka Logistics Solutions operates through a digital platform called the BlackBuck app which caters to truck operators. Through its platform, the company offers digital payments for tolling and fueling to its customers, monitors drivers and fleets using telematics, finds loads on its marketplace, and gives access to financing for the purchase of used vehicles. Here’s a brief highlight of the company's business in each of its offerings.
Payments: The customers can recharge for tolling and fueling through the BlackBuck App into the payment instrument of the FASTag and fuel partners. These recharges by the operators are deposited into the company’s app which is then remitted to its partners.
During FY24, the gross transaction value (GTV) on the app stood at Rs.17,396.19 crores and the company will get an agreed percentage of the total GTV payments which contributes towards its revenue.
Telematics: This facility offers truck operators real-time visibility into fleet movements, route optimization, and enhanced fuel management. Currently, the company is one of the largest players for vehicle tracking solutions in the trucking segment in India, with 3,56,050 average monthly active telematics devices in FY24.
Loads marketplace: This facility matches truck operators (who need loads) with shippers (who are looking for trucks) across commodities, load weights, truck types, and distance ranges. The company’s loads marketplace is India’s largest digital freight platform with 2.12 million digital loads posted in Fiscal 2024.
Vehicle Financing: The company offers financing solutions to its operators which enables them to buy used commercial vehicles. The company generates revenue from this facility through its loan service fee. As of June 30, 2024, the company has facilitated disbursements of 5,109 loans amounting to Rs.252.75 crores.
These are the segments through which the company primarily derives its revenue. The following image will show you the revenue breakdown of the company from its continuing operations:
Source: RHP of the company
As of FY24, the company is India’s largest digital platform for truck operators (in terms of the number of users), with 963,345 truck operators in the country transacting on its platform, which comprises 27.52% of India’s truck operators.
Zinka Logistics Solution IPO - Financial Overview
The following image shows you the key financial details of Zinka Logistics Solution IPO for three financial years:
Source: RHP of the company
When we look at the financials of Zinka Logistics Solution, we can see that its revenue has doubled from Rs.156.12 crores in FY22 to Rs.316.51 crores in FY24. However, the company has been reporting losses in the past three financial years mainly due to its employee benefit expenses and expenses related to Manpower and agency services. As of FY24, the company has reported a net loss of Rs.166.98 crores and reported an ROE of 53.64% to its shareholders.
While the annual statement indicates that the company is bleeding money, its recent quarterly report paints a slightly better picture. During Q1FY24, the company reported a total loss of Rs.33.31 crores after earning a total revenue of Rs. 64.35 crores. However, in Q1FY25, the company reported a net profit of Rs. 32.37 crores with a total revenue of 98.33 crores.
Zinka Logistics Solution IPO - Industry Overview
The Indian trucking industry stands as a crucial component of the nation's logistics sector. As of FY24, there are approximately 12.5 million trucks and about 3.5 million truck operators in the country. The industry has grown at a CAGR of 8-9% over the past four years and has a revenue pool of U.S 18 to 25 billion dollars.
The growth trajectory is anticipated to persist over the next four years, fueled by factors such as increased consumption, expanded capacity on high-density routes, improved infrastructure, and the implementation of the Vehicle Scrappage Policy, and is projected to reach approximately US 35 billion dollars by FY28.
While India’s economic growth sets a strong foundation for the expanding trucking sector, its faces inherent inefficiencies pose challenges for truck operators. These challenges exist due to the industry's fragmented nature across the country.
Addressing these challenges presents significant opportunities for companies operating in this sector. While digital platforms provide scalability, maintaining a physical presence is essential for establishing trust with truck operators. Companies that successfully navigate these issues have the potential to capture a considerable market share in India's expanding trucking industry.
Zinka Logistics Solution IPO - Peer Comparison
Zinka Logistics Solution provides a platform for payments, telematics, loads marketplace, and vehicle financing services. Currently, there are no like-to-like listed companies in India or abroad that engage in a business similar to that of Zinka. However, the company has mentioned some companies as its peers, considering similarities with certain offerings of its business:
Source: RHP of the company
Zinka Logistics Solution IPO - Risk Factors
The company relies on key partners for its payments and vehicle financing offerings, with payment partners contributing 41.04% and 42.50% of total revenue in the three months ended June 30, 2024, and Fiscal 2024, respectively. A FASTag Partner Bank alone contributed 29.62% and 33.51% over the same periods. Losing any of these partners could negatively impact the company's business, operations, and financial health.
The company relies on key suppliers for a substantial portion of its vehicle tracking solutions. Without long-term agreements with these suppliers, any denial of supplies, loss of relationships, or supply chain disruptions could negatively impact the company’s business, operational results, and financial condition.
The company relies on third-party service providers to implement its sales and service strategy on its platform. Any disruption or interference with these services could adversely impact the company’s business, operational results, and financial condition.
Zinka Logistics Solution IPO - Objective Of The Issue
The net proceeds from the fresh issue of the Zinka Logistics Solution IPO shall be used by the company for the following purposes:
To fund sales and marketing expenses.
To invest in its NBFC subsidiary, Blackbuck Finserve Private Limited, in order to enhance its capital base and support future financial requirements.
To cover expenses related to product development.
For general corporate purposes.
Zinka Logistics Solution IPO Details
Zinka Logistics Solution IPO Date
Zinka Logistics Solution IPO is open to subscription from November 13, 2024, to November 18, 2024. The shares will be allotted to investors on November 19, 2024, and the company will be listed in the NSE and BSE on November 21, 2024.
Zinka Logistics Solution IPO Issue Price
Zinka Logistics Solution is offering its shares in the price band of Rs.259 to Rs.273 apiece. This means you would require an investment of Rs.14,742 per lot (54 shares) if you are bidding for the IPO at the upper price band.
Zinka Logistics Solution IPO Size
The Zinka Logistics Solution is offering a total of 40,832,320 shares, amounting to Rs. 1,114.72 Crores. Out of these, 20,146,520 shares worth Rs. 550 Crores are offered through a fresh issue, and 20,685,800 shares worth Rs.564.72 Crores are offered through an offer for sale.
Zinka Logistics Solution IPO GMP
Many investors look at the Grey Market Premium (GMP) before applying for the Zinka Logistics Solution. The GMP gives an idea of market sentiment and can hint at the possible listing price. However, it should be noted that it does not reflect how financially strong the Zinka Logistics Solution is. Thus, it is important to financially analyze the stock before investing in it.
Zinka Logistics Solution IPO Allotment Status
The shares from the Zinka Logistics Solution IPO will be allotted to its investors on November 19, 2024. One can check the allotment status for the Zinka Logistics Solution IPO from its registrar KFin Technologies Limited, the BSE website, or your broking platform where you have applied for the Zinka Logistics Solution IPO.
Zinka Logistics Solution IPO Application Link
Open a demat account with Rupeezy today and enjoy a seamless experience when applying for the IPO. With an easy-to-use platform, Rupeezy makes the IPO application process quick and hassle-free. Click on the apply link below to get started.
Apply for Zinka Logistics Solution IPO
Is Zinka Logistics Solution IPO a Good or Bad Investment? Final Thoughts
Zinka Logistics Solution IPO Review: Operating in India's expanding trucking sector, Zinka Logistics Solution has positioned itself as a comprehensive digital platform addressing key industry pain points through payments, telematics, and marketplace solutions. The company's recent move towards profitability and strong market presence are encouraging signs.
However, investors should consider the operational risks from partner dependencies alongside the broader opportunity to digitize India's fragmented trucking ecosystem. Therefore, the company's success will largely depend on its ability to maintain its growth trajectory while building a sustainable business model in this evolving sector.
For those interested in investing in such IPOs, you can open a demat account with Rupeezy. Our trading platform allows you to participate in various investment opportunities including initial public offerings.
