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Are you interested in IPOs that tap into the fast-evolving tech-driven logistics sector? The upcoming IPO of Zinka Logistics Solution Limited (BlackBuck) is a chance to invest in a company that aims to transform India’s trucking industry digitally.
As the most prominent digital platform for truck operators, BlackBuck offers an end-to-end solution for toll and fuel payments, telematics, and even vehicle financing.
In this blog, you will get a detailed analysis of Zinka Logistics IPO, covering its financials, sector outlook, risks, and more.
Zinka Logistics IPO is open for subscription from (13th Nov 2024) today onwards!
Zinka Logistics IPO Details
- IPO Open Date 13th November 2024, Wednesday
- IPO Close Date 18th November 2024, Monday
- Price Band ₹259 to ₹273 per share
- Lot Size 54 shares
- Face Value ₹1 per share
- Issue Size at upper price band ₹1,115 crore (₹550 crore fresh issue and ₹565 crore offer for sale)
- Listing exchanges NSE, BSE
- Cut-off time for UPI mandate confirmation by 5 PM on November 18, 2024
Now, let’s look at the tentative timeline for the Zinka Logistics IPO:
The tentative timeline for the IPO is as follows:
- Basis of Allotment 19th November 2024, Tuesday
- Initiation of Refunds (if not allotted) 20th November 2024, Wednesday
- Credit of Shares to Demat (if gets allotments of shares) 20th October 2024, Wednesday
- Listing Date 21st October 2024, Thursday
About the Company
Founded in 2015, Zinka Logistics Solutions Limited (operating as BlackBuck) has emerged as India’s largest digital trucking platform. BlackBuck connects over 9,63,000 truck operators nationwide, offering services that include toll payments, fuel management, telematics, freight brokerage, and vehicle financing. Its asset-light business model and expansive reach with 9,374 touchpoints enable BlackBuck to support the vast and highly fragmented Indian trucking industry, which remains a vital sector for logistics across the country.
- Key Services Offered
- Toll Payments: BlackBuck streamlines toll payments for truck operators via its platform, offering transparency and control over expenses. BlackBuck partners with FASTag partner banks (5-20 year agreements), earning commissions on toll transactions based on government-regulated fees.
- Fuel Payments: BlackBuck collaborates with oil marketing companies (OMCs), distributing fuel cards to truck operators, who are also enrolled in loyalty programs. Commissions from OMC partners depend on the monthly fuel consumption volume and transaction value.
- Telematics: Through telematics, BlackBuck provides real-time fleet tracking, route optimization, and fuel management services starting from FY24. BlackBuck purchases vehicle tracking solutions from domestic suppliers, generating revenue through subscription fees, typically ranging from one month to six years.
- Listing Marketplace: Registered shippers post load details (pickup, delivery points, cargo, etc.) on the BB Transporter app, allowing truck operators to negotiate terms securely. Shippers subscribe to access the platform and complete transactions directly with operators.
- Freight Brokerage: This service covers end-to-end transaction management for shippers, from load discovery to final payment settlement. BlackBuck operates this through a central hub in Bengaluru, handling payments and earning commissions based on the difference collected from shippers versus payouts to truck operators.
- Vehicle Financing: BlackBuck enables truck operators to finance used commercial vehicles through a tech-driven financing platform. BlackBuck’s NBFC subsidiary, BlackBuck Finserve Private Limited (BFPL), administers vehicle loans, generating revenue from service fees and interest income.
The company generates revenue through platform fees, commissions, subscription fees, and vehicle financing income. Its revenue mix (FY24) includes 43% from commissions, 40% from subscriptions, 17% from service fees, and 17% from other income streams. Each of these services aligns with BlackBuck’s mission to digitize trucking operations across India. To know more about these services and how they support BlackBuck’s revenue structure, check out the Edge Report available on StockEdge.
Sector Outlook
The Indian trucking industry, a key component of the logistics sector, has shown steady growth due to rising consumption, infrastructure development, and increased adoption of digital tools. With about 1.25 crore trucks in India and 35 lakh truck operators, the industry has grown at an 8-9% CAGR over recent years. BlackBuck’s focus on digital solutions aligns with significant trends in logistics and transportation. Let’s check the key growth drivers of this sector.
- Digital Penetration: Initiatives like FASTag have transformed toll collections, achieving a 98% penetration rate.
- Fuel Loyalty Programs: Major Oil Marketing Companies (OMCs) in India have just 21% penetration, indicating room for growth in loyalty-driven fuel solutions.
- Vehicle Financing: The used truck financing segment is primarily served by unorganized players, creating an opportunity for BlackBuck’s NBFC subsidiary to expand its footprint.
The growth of digital marketplaces and telematics solutions in the trucking sector further supports the opportunity for greater operational efficiency and market consolidation, with online platforms like BlackBuck well-positioned to capture a meaningful share of this evolving market.
You can read our blog to know What drives Logistics growth.
Financial Performance
In recent years, BlackBuck has shown consistent revenue growth, yet profitability remains a significant hurdle. From FY22 to FY24, revenue surged from ₹119 crore to ₹297 crore, reflecting BlackBuck’s success in expanding its customer base and enhancing its service offerings. However, despite this positive top-line trajectory, the company has been incurring substantial losses. For instance, in FY24, BlackBuck reported a net loss of ₹167 crore, though this marked a slight improvement from a net loss of ₹237 crore in FY23.
The company’s EBITDA margin, a key indicator of operational efficiency, has also been in the negative territory, though showing signs of gradual improvement. BlackBuck’s EBITDA margin was -196.8% in FY22, reduced to -53.4% by FY24. This shift suggests that while the company’s expansion strategy is paying off in terms of revenue, the operational cost structure remains a challenge, indicating a need for tighter expense management and possibly a restructuring of its revenue model to achieve sustainable profitability.
Objectives of the Issue
Zinka Logistics IPO aims to raise ₹1,115 crore, out of which the fresh issue of ₹550 crore and ₹565 crore offer for sale. The company wants to deploy the net proceeds from fresh offerings to fund the following objects:
- Funding towards sales and marketing costs.
- Investment in Blackbuck Finserve Private Limited, an NBFC subsidiary, is required to fund the expansion of its capital base and satisfy future capital requirements.
- Funding of expenditure with product development.
Let’s now look at some risks associated with the Zinka Logistics IPO.
Risk Factors
Before investing in the Zinka Logistics IPO, you should understand the risk factors related with it.
- Dependency on Key Partners: Significant revenue sources are dependent on FASTag partner banks and fuel and financing partners.
- Financial Performance and Profitability Concerns: Persistent losses and high operating expenses could impact future profitability.
- Competitive Landscape: The fragmented nature of logistics, combined with competition from traditional NBFCs, may challenge growth.
- Reliance on Key Suppliers: Limited suppliers for telematics solutions pose risks in case of supply chain disruptions.
Should you subscribe to the Zinka Logistics IPO?
Zinka Logistics Ltd is the most prominent digital platform for truck owners in terms of number of users. There are numerous players in the market who offer piecemeal solutions. However, Blackbuck is a new-age, tech-led end-to-end player that provides all related solutions under one roof. While this digital platform delivers scalability, maintaining a physical presence is crucial for building trust with truck operators. They operate in a dynamic industry with various challenges. Moreover, the valuation seems elevated.
Before you invest in Zinka Logistics IPO, make sure you understand the potential risks and rewards. In this blog post, we have provided a full review of both the benefits and possible drawbacks of participating in the Zinka Logistics IPO. StockEdge’s panel of experts rated Zinka Logistics IPO as Average. Furthermore, we’ve created a complete IPO Note that delves deep into the company’s financial situation and SWOT analysis, providing you with a more in-depth understanding of the company’s prospects.
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