| Price | Lot Size | Issue Date | Issue Size |
|---|---|---|---|
| ₹ 259 to ₹ 273 | 54 | 13th Nov, 2024 – 18th Nov, 2024 | ₹ 1,114.72 Cr |
About Zinka Logistics Solutions Ltd IPO
Zinka Logistics Solutions Ltd (BlackBuck) is India’s largest digital platform in terms of the number of users for truck operators, with 9,63,345 (27.5% of truck operators in India) trucks operators in the country transacting on its platform (BlackBuck App). The BlackBuck app is a platform that provides 1) payments – enabling users to manage payments of tolling and fuelling digitally. The company generates income through commission margins from FASTag Bank Partners on the toll transaction and from OMCs in fueling transaction flowthrough; 2) telematics – which helps monitor drivers and fleets. Income in this segment is earned through monthly or annual subscription fees; 3) assistance locating loads marketplace. Revenue is generated through subscription fees charged to shippers for posting loads on the BB Transporter app and 4) access to financing for purchasing new vehicles. Revenues are generated through loan service fees. The company derives a significant portion of its revenue through the commission income from its payment’s offerings and telematics services, i.e. 94%, as of the end of FY24. A detailed breakdown of its revenue is as follows: Commission income – 42.8%, Subscription fees – 39.7%, Service fees – 17.2% and other services – 0.3% as of the end of FY24. The company follows an omnichannel customer onboarding and servicing strategy for the demography. They have a digital-led marketing strategy that provides customers with awareness of their solution and brand. They boast an on-ground sales force, channel partners and telesales, through which they support client onboarding. Among the new-age digital platforms in the trucking sector, BlackBuck has India’s largest physical touchpoint network. The company have sold and serviced its products through 80% of the districts in India and 76% of the toll plazas.
Objective of the Zinka Logistics Solutions Ltd IPO
The company proposes to utilize net proceeds towards funding the following objects:
- Funding towards sales and marketing costs;
- Investment in Blackbuck Finserve Private Limited, NBFC subsidiary, for financing the augmentation of its capital base to meet its future capital requirements;
- Funding of expenditure in relation to product development; and
- General corporate purposes.
Rationale To Invest In Zinka Logistics Solutions Ltd IPO
Strategic market expansion and enhanced client service to enhance market presence
The company understands that building trust with truck operators on a digital platform requires significant handholding due to a perceived lack of trust. The company aims to close this gap through its sales and service strategy. By leveraging a mix of digital and targeted notifications through the BlackBuck app alongside its 9,374 touchpoints, the company can effectively acquire new customers and cross-sell its products to existing clients. The company has also implemented a customer servicing strategy to ensure that the needs of existing clients are met. As the platform attracts more truck operators, it can gather additional data, enabling the company to refine its solutions and identify cross-selling opportunities. It also allows the company to create tailored product offerings that simplify operations, improve efficiency, and enhance the profitability of its truck operator partners. Additionally, as the platform’s network of truck operators grows, shippers seeking efficient loading will be attracted, further reinforcing the platform’s value proposition. The company further intends to deepen its distribution base and increase the density of its distribution in key strategic pockets in India (Gujarat, Karnataka and Tamil Nadu), where it has a lower market share. This strategy will empower product reach to a wider geography and capitalization on market gains. The company’s approach to scaling its customer base and developing products to meet the client’s requirements positions it well for sustained growth and a stronger market presence.
In-house technology integration, customer-centric approach and planned innovation augurs well for sustained growth
The company follows a consumer-centric approach to address the evolving needs of its clients. This has helped the company to launch multiple offerings. The company has developed most of its technology stack and solutions in-house, aimed at providing reliable, accurate and real-time solutions to several key challenges faced by truck operators in India through its platform. Zinka has a dedicated in-house product, engineering, and data science team that develops technology layers, enabling a comprehensive suite of solutions to address challenges. It is assisted by customer input to ensure continuous feedback-driven new product development. As the scale of operation increases and with the launches of new offerings, the company plans to build its technology simultaneously to manage the upscaling. The company intends to innovate in vehicle financing through technology-enabled loan origination systems, fraud detection, prevention systems and sales enablement products. The company will invest in further product development in newer telematics offerings of fuel sensors to enable affordability and accuracy to scale ahead. Its multiple business offerings also rely on data capabilities, which help build intelligence interfaces and optimize operations for its customers. The company intends to use Rs. 750 million for product development.
Valuation of Zinka Logistics Solutions Ltd IPO
Zinka Logistics is a prominent player in the digital trucking solution provider environment. It follows an asset-light model based on offering services to truck operators and generates revenue through platform fees, subscription fees, and commissions. With the help of its platform (BlackBuck), the company can provide effective logistic solutions to truck operators. The company is poised to benefit from building trust and expanding its customer base through a robust sales and service strategy. Its strategic market expansion and continuous product development will further enhance its market presence and profitability. On the economic front, the trucking industry is highly fragmented, with approximately 12.5 million trucks and 3.5 million truck operators in Fiscal 2024 traversing Indian roads; the total freight value through trucks has witnessed a steady growth rate of 8 to 9% CAGR over the past four years. The company is well-positioned to capitalize on the market growth opportunities with its digital products, which can tackle challenges and inefficiencies and enhance value for truck operators. Financially, the company has reported a healthy revenue growth at a CAGR of 57.7% between FY22-24; however, the company has reported losses on the EBITDA / PAT front during the same period. The reason can be attributed to its high marketing and sales costs. During the quarter that ended on June 30, 2024, the company reported a positive EBITDA and PAT. The PAT growth was a one-time effect due to an exceptional item caused by the lender’s waive-off of Rs. 256.23 million. The company also exhibited a steady recovery in its operational cash flow. Given the company’s strong market presence and industry tailwinds, it provides a medium- to long-term opportunity. We, therefore, recommend a SUBSCRIBE rating for the issue.
What is the Zinka Logistics Solutions Ltd IPO?
BlackBuck IPO is a book built issue of Rs 1,114.72 crores. The issue is a combination of fresh issue of 2.01 crore shares aggregating to Rs 550.00 crores and offer for sale of 2.07 crore shares aggregating to Rs 564.72 crores. Login to your account now.
How to apply for the Zinka Logistics Solutions Ltd IPO through StoxBox?
To apply for the Zinka Logistics Solutions Ltd IPO through StoxBox one can apply from the website and also from the app. Click here
When will the Zinka Logistics Solutions Ltd IPO open?
Zinka Logistics Solutions Ltd IPO is opening on 13th November 2024. Apply Now
What is the lot size of the Zinka Logistics Solutions Ltd IPO?
The Lot Size of Zinka Logistics Solutions Ltd IPO is 54 equity shares. Login to your account now
When is the Zinka Logistics Solutions Ltd IPO allotment date?
The allotment Date for Zinka Logistics Solutions Ltd IPO is 19th November 2024. Login to your account now.
When is the Zinka Logistics Solutions Ltd IPO listing date?
The listing Date for Zinka Logistics Solutions Ltd IPO is 21st November 2024. Login to your account now
What is the minimum investment required for the Zinka Logistics Solutions Ltd IPO?
In the Retail segment the minimum investment required is Rs. 14,742. Login to your account now
What is the maximum investment allowed for the Zinka Logistics Solutions Ltd IPO?
In the Retail segment the maximum investment requirement is Rs. 191,646. Login to your account now
What are the risks associated with investing in the Zinka Logistics Solutions Ltd IPO?
- The company can face competitive pressure in its business from the development of a railway network as an alternative to road freight. Its vehicle financing arm also faces tough competition from other well-established financing institutions that continue to push for higher market share as the digital landscape evolves.
- The company has witnessed high employee attrition (37.3% and 41.1% in the three months ending June 30, 2024, and FY24, respectively), which can adversely its operations.
- The company’s vehicle financing exposes it to risks, such as high-risk borrowers and collateral recovery, which could affect its business..
When will the Zinka Logistics Solutions Ltd IPO shares be credited to my Demat account?
The Zinka Logistics Solutions Ltd IPO be credited to the account on allotment date which is 19th November 2024. Login to your account now
Where can I find the Zinka Logistics Solutions Ltd IPO prospectus?
The prospectus of Zinka Logistics Solutions Ltd IPO prospectus can be find on the website of SEBI, NSE and BSE
What are the important dates related to Zinka Logistics Solutions Ltd IPO?
| IPO Open Date | Wednesday, November 20, 2024 |
| IPO Close Date | Monday, November 18, 2024 |
| Basis of Allotment | Tuesday, November 19, 2024 |
| Initiation of Refunds | Wednesday, November 20, 2024 |
| Credit of Shares to Demat | Wednesday, November 20, 2024 |
| Listing Date | Thursday, November 21, 2024 |
| Cut-off time for UPI mandate confirmation | 5 PM on November 18, 2024 |
