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Outlook & Valuation

On the financial performance front, for the last three fiscals, the company has posted a total income/net profit/ - (loss) of Rs. 156.13 cr. / Rs. - (230.35) cr. (FY22), Rs. 195.09 cr. / Rs. - (236.85) cr. (FY23), and Rs. 316.51 cr. / Rs. - (166.99) cr. (FY24). For Q1 of FY25 ended on June 30, 2024, it posted a net profit of Rs. 32.38 cr. on a total income of Rs. 98.33 cr. Thus it has turned the corner from Q1 of ongoing fiscal. But it will take some time to wipe out its carried forward losses.

For the last three fiscals, the company has reported an average EPS of Rs. - (11.00) (on continuing business), and an average RoNW of - (55.77) %. The issue is priced at a P/BV of 14.60 based on its NAV of Rs. 18.70 as of June 30, 2024, and is at a P/BV of 5.38 based on its post-IPO NAV of Rs. 50.71 per share (At upper cap).

If we attribute annualized FY25 earnings to post-IPO fully diluted equity base, then the asking price is at a P/E of 37.19 and based on FY24 earnings, the P/E stands negative. Thus the issue appears aggressively priced. PAT margins and RoCE margins data is missing from the offer documents.

The company is a leading digital platform for truck owners, offering a comprehensive range of related services under one roof. It reported losses until FY24 but turned profitable starting in Q1-FY25. Based on annualized earnings for FY25, the issue seems aggressively priced. Investors who are wellinformed, have surplus cash, and are willing to take risks might consider allocating moderate funds for the long term.

Objective of The Issue

The company propose to utilise the Net Proceeds towards funding the following objects:

* Funding towards sales and marketing costs;

* Investment in Blackbuck Finserve Private Limited, its NBFC subsidiary, for financing the augmentation of its capital base to meet its future capital requirements;

* Funding of expenditure about product development; and

* General corporate purposes.

Business Overview

Zinka Logistics Solution Ltd. (ZLSL) 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 its platform in Fiscal 2024, which comprises 27.52% of India's truck operators India's growing economy needs the support of robust logistical capabilities and small and medium size truck operators are the backbone of logistics in the country. These truck operators are served through value chains which are unorganized and fragmented, making their operations inefficient. The company is on a mission to digitally empower India's truck operators, helping them manage their business and grow their income. Using its platform, customers (primarily comprising truck operators) digitally manage payments for tolling and fuelling, monitor drivers and fleets using telematics, find loads on marketplace and get access to financing for the purchase of used vehicles.

Its methodology of disclosing the GTV may not be comparable to the methodology used by other platform companies. Truck operators manage their truck-level tolling and fuelling operations through the BlackBuck App, and gain cost benefits and effective control over expenses through decreased risk of pilferage and unauthorized spending. Truck operators purchase telematics services such as vehicle tracking and fuel sensors to manage their drivers and fleets. It had 390,088 and 356,050 average monthly active telematics devices in the three months ended June 30, 2024 and Fiscal 2024, respectively.

Truck operators use its loads marketplace product to search for loads to fill their empty capacities or to get a better price for a load. The company had 0.71 million and 2.12 million load postings in the three months ended June 30, 2024 and Fiscal 2024, respectively, which enabled 133,369 and 256,685 truck operators to get a load during the same periods. Truck operators avail used commercial vehicle financing through its platform. As on June 30, 2024, it had facilitated disbursements of 5,109 loans amounting to Rs. 252.76 cr. Its offerings solve critical problems for customers and form an integral part of their daily lives.

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