Black Buck IPO

About Zinka Logistics (BlackBuck) IPO:

Zinka Logistics IPO is an IPO of 1,114.72 crores. It consists of a fresh issue of ₹550 crores and a fresh issue of ₹564.72 crores. The IPO will open on Nov 11, 2024 and will close on Nov 13, 2024. Anchor bidding will take place on Nov 12, 2024 and shares will be credited on Nov 20, 2024. The initiation of refunds will take place on Nov 20, 2024.

Anchor investors:

The anchor investor bid opens and ends on Nov 12, 2024. The company may allocate up to 60% of the QIB portion to anchor investors, out of which one third will be allocated to Mutual Funds.

Book running lead managers:

Axis Capital
Morgan Stanley
JM Financials
IIFL Capital

Retail and HNI application:

The retail portion of the Zinka Logistics IPO consists of not less than 550 crore equity shares of face value of ₹1. Not less than 35% of the net offer is for retail individual bidders

About company:

The company is India’s largest digital platform for truck operators (in terms of number of users), with 963,345 truck operators in the country transacting on their platform in FY 2024, which comprises 27.52% of India’s truck operators (Source: Redseer Report).

Business Model:

Zinka logistics earns its revenue through the following sources:

• Truck operators manage their truck-level tolling and fueling operations through the Black Buck App, and gain cost benefits and effective control over expenses through decreased risk of pilferage and unauthorized spending. Their annual transacting truck operations were 963,345 in FY24.

• Truck operators purchase telematics services such as vehicle tracking and fuel sensors to manage their drivers and fleets. In FY24, the company had 356,050 (average monthly active telematics devices).

• Truck operators avail used commercial vehicle financing through their platform. As of March 31, 2024, they had facilitated disbursements of 4,035 loans amounting to ₹1,967.88 million.

Growth Trajectory:

ZLSL's revenue from operations has increased consistently in recent years, from ₹119.33 crore in FY22 to ₹175.68 crore in FY23, and ₹296.92 crore in FY24.

ZLSL's profit after tax (PAT) increased by 33.24% between the financial year ending with March 31, 2024 and March 31, 2023.

Market Position:

The current market position of Zinka logistics is that it is India’s largest digital platform for truck operators.

Zinka Logistics is India’s largest digital platform for truck operators (in terms of number of users) as of March 31, 2024, according to the Redseer Report, and the company has facilitated over 413.34 million transactions for 963,345 annual transacting truck operators in FY24. They served 27.52% truck operators in India and facilitated 32.92% of the commercial vehicles tolling payments in FY2024 (Source: Redseer Report). The company’s services are available across 628 districts, constituting 80% of India’s districts as of June 30, 2024 (Source: Redseer Report).

Zinka Logistics (BlackBuck) IPO Key Points

Objectives of the IPO:

• Funding towards sales and marketing costs;
• Investment in Blackbuck Finserve Private Limited, our NBFC subsidiary, for financing the augmentation of its capital base to meet its future capital requirements;
• Funding of expenditure in relation to product development;
• General corporate purposes.

Subscription Details

Qualified Institutional Buyers: 75% Non-Institutional Bidders: 15% Retail: 10%

Potential Benefits for Investors:

• Infrastructure is a key pillar of the Indian economy, projected to grow at 6.6% between 2023 and 2028. Growth in infrastructure investment is boosting the logistics sector, which is outpacing GDP growth. As a result, road transportation in India (which drives 46% of logistics as of Fiscal 2024) is witnessing the most significant impact of these macroeconomic development. In India, logistics is growing faster than the GDP due to its integral role in infrastructure development.By investing in Zinka Logistics, the investor gets to be a part of a company that is in an industry that is beating GDP growth numbers and driving the infrastructure of the company.

• Zinka logistics is India’s largest digital platform for truck operators (in terms of number of users), with 963,345 truck operators in the country transacting on our platform in Fiscal 2024, which comprises 27.52% of India’s truck operators (Source: Redseer Report). By investing in the company, the investor can be a part of India’s biggest digital platform for truckers and witness the quick growth, strong financials and steady management of the company.

Zinka Logistics (BlackBuck) IPO Risk Factors

A detailed examination of potential risks and challenges associated with investing in Zinka Logistics's IPO.

• The company and their subsidiary, TZF Logistics Solutions Private Limited have incurred losses and witnessed negative operating cash flows in the past. Further, their Subsidiary, BlackBuck Private Limited, has witnessed negative operating cash flows in the past three financial years.

• The company depends on their business partners in their payments and vehicle financing offerings. Their partners contribute to a significant portion of their revenue (41.04% and 42.50% of total revenue from continuing operations in the three months ended June 30, 2024 and Fiscal 2024, respectively) and one of their FASTag Partner Banks contributed 29.62% and 33.51% of total revenue from continuing operations in the three months ended June 30, 2024 and Fiscal 2024, respectively. Any negative impact on these offerings could hurt their business.

• The company’s revenue is significantly dependent on their payments and telematics offerings, which contributed 92.79% and 94.53% to their total revenue from continuing operations in the three months ended June 30, 2024 and Fiscal 2024, respectively. Any negative impact on these offerings could hurt their business.

Key Strategies of Zinka Logistics

• Deepen distribution and continue strengthening the truck operator base
• Continue investing in our core verticals of payments and telematics
• Focus on growing our loads marketplace and vehicle finance verticals

Conclusion

Zinka Logistics is a segment leader, with fast-growing revenues and a strong PAN India presence. However, negative cash flows in the recent past and dependence on payments and telematics can hinder their progress. If you want to invest in the IPO, thoroughly assess the risks and strengths.