Zinka Logistics IPO 2024: Should You Subscribe?

Zinka Logistics Solution Limited, a leading player in India’s logistics and transportation technology space, is launching its Initial Public Offering (IPO) from November 13th to November 18th, 2024. 

 The IPO aims to raise ₹1,114.72 crores and offers investors an opportunity to be a part of the company’s growth in transforming India’s trucking and logistics industry through its digital platform, BlackBuck. 

Here are 10 key things you should know before investing in the Zinka Logistics Solution Limited IPO:

1. What are the IPO dates, price band, and issue size?

Here is the key information about the Zinka Logistics IPO: 

IPO Dates: November 13th–18th, 2024 

Face Value: ₹1 per share 

Price Band: ₹259 – ₹273 per share 

Total Issue Size: ₹1,114.72 Crore 

Listing Date: Thursday, November 21, 2024 

Listing Exchanges: BSE, NSE

2. What is the minimum investment for Zinka Logistics IPO?

The lot size of the IPO is 54 shares, meaning the minimum investment required is ₹13,986 (54 shares * ₹259 per share at the lower price band).  

3. What does the company do?

Zinka Logistics Solution Limited operates BlackBuck, a digital platform aimed at truck operators across India. Launched in April 2015, the platform provides services such as freight marketplace, telematics, payments, vehicle financing, and more. The company uses technology to match a shipper with a trucker and facilitate price discovery. By FY24, BlackBuck had 963,345 active truck operators using its platform, covering 27.52% of India’s total truck operators. The company is helping truck owners streamline operations, finance vehicles, and access critical services.  

The peers of Zinka include C.E. Info Systems Ltd, Fleetcor Technologies Limited, Full Truck Alliance Co. Ltd 

4. What is the Zinka IPO objective? Why is the company raising money?

Zinka Logistics IPO is a combination of fresh issue and an offer-for-sale (OFS). Of the ₹1,114.72 crores, the company will raise ₹550 crores through fresh issue and the proceeds will be used for: 

• Sales and marketing expenses 

• Investment in BlackBuck Finserve (its NBFC subsidiary) for capital augmentation 

• Product development expenses 

• General corporate purposes 

5. How much is the IPO reservation for retail and other investors?

The company has allocated: 

• 75% for Qualified Institutional Buyers (QIBs) 

• 10% for Retail Investors 

• 15% for Non-Institutional Investors (NIIs) 

6. What are the key strengths and potential risks of investing in Zinka Logistics IPO?

Key Strengths: 

• BlackBuck’s platform serves over 963,000 truck operators across 628 districts in India, covering 80% of the country’s districts. 

• It has a strong presence in vehicle financing and telematics, disbursing 4,035 loans in FY24. 

• The company’s platform generates significant value, averaging 356,050 active telematics devices monthly and processing a gross transaction value (GTV) of ₹173,961.93 million in FY24. 

• BlackBuck utilizes a wide range of digital marketing and ground-based strategies to acquire and retain customers, ensuring business growth. 

Potential Risks: 

• BlackBuck has faced consistent losses over the past few years, with a loss after tax of ₹193.95 crore in FY24. 

• A large portion of its revenue comes from key partners for payments and vehicle financing. Losing these partnerships could negatively impact the business. 

• Regulatory changes or disruptions in the logistics and transportation sector may affect revenue from telematics and payment services. 

• The company is involved in ongoing legal proceedings, which may result in unfavorable outcomes. 

7. Can you share the financial performance of Zinka Logistics Solution?

Zinka Logistics is working on improving its financial position. Despite reporting consistent losses, the company’s revenue has been increasing: 

8. What is the allotment date of Zinka Logistics IPO?

The allotment date for the Zinka Logistics IPO is November 19th, 2024. You can check the allotment status on the registrar’s website.

9. Who are the merchant bankers and registrars for Zinka Logistics IPO?

The book-running lead managers for the IPO are: 

• ICICI Securities 

• IIFL Securities 

• Jefferies India Private Limited 

• J.P. Morgan India Private Limited 

The registrar for the issue is Link Intime India. 

 10. Should you invest in Zinka Logistics Limited IPO?

Zinka Logistics Solution’s BlackBuck platform has proven to be a valuable tool for India’s logistics and trucking industry, with strong growth in user adoption and revenue. However, the company has faced financial losses, and its dependence on key partners for revenue raises concerns about stability. 

At the price band of ₹259 – ₹273, the company is priced at a high P/E ratio, considering its loss-making track record. This makes the IPO a higher-risk investment.  

For risk-tolerant investors looking to bet on the growing logistics sector, this IPO may offer long-term growth potential, especially if the company can improve its profitability and strengthen partnerships. A “Subscribe” rating is recommended for those with a high-risk appetite.  

Make an informed decision and happy investing!