Stock in focus: Zaggle Prepaid share price surge 200% since IPO; Check out four factors driving this new age tech stock

Stock in focus: Zaggle Prepaid share price has witnessed an impressive surge, jumping nearly 200% from its IPO price of ₹164 since its listing on September 22, 2023. This remarkable growth has delivered substantial multibagger returns for investors within just 14 months. In comparison to other new-age companies, Zaggle stands out significantly in terms of investor returns. For instance, while PB Fintech (Policybazaar) has provided returns exceeding 70%, companies like One 97 Communications (Paytm), Fino Payments Bank, and Infibeam Avenues have faced declines in their share prices. This performance positions Zaggle Prepaid Ocean Services as a notable success story in the current market landscape.

According to Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, Zaggle Prepaid share price has given staggered returns post its listing opening at ₹164 and has given 185% return. The overall trend remains positive, with any minor dip getting bought into. Strong support is seen around ₹440, whereas the next resistance is around ₹520.

Over the past month, Zaggle Prepaid share price has seen a remarkable increase, rising by 15.33%. This performance is notably stronger compared to the BSE Information Technology index, which has experienced a growth of 3.32%, and the Sensex, which is up by just 1.07%.

Zaggle’s strong performance can be attributed to several key factors:

Major Client Acquisitions

Zaggle has made significant strides in expanding its client base by onboarding two major clients: Mumbai Metro One and Strada India Private Limited. This development not only highlights Zaggle's growing influence in the market but also reflects its commitment to delivering innovative financial solutions tailored to diverse industries.

Robust Financial Growth

The company reported a remarkable consolidated profit growth of 145% year-on-year (YoY) for Q2 FY25, reaching ₹18.6 crore, up from ₹7.6 crore in Q2 FY24. This significant increase highlights the company's strong performance and effective strategies implemented over the past year.

Expansion Plans

Zaggle’s board has approved a substantial capital raise of ₹950 crore to fuel its growth initiatives. This funding is expected to bolster the company’s strategic plans and expand its operations, enabling it to explore new market opportunities and enhance its product offerings

Strategic Acquisitions

In September, Zaggle acquired a 98% stake in Span Across IT Solutions Pvt Ltd for approximately ₹32 crore and a 26% stake in Technologies for ₹15.6 crore. These acquisitions are part of Zaggle's strategy to strengthen its portfolio and enhance its capabilities in the technology sector.

Equirus Securities initiates coverage with LONG 

The brokerage house believes that Zaggle is in the early stages of its lifecycle, with several growth opportunities ahead, including: (a) acquiring new customers, (b) increasing cross-selling of products to existing customers, (c) expanding globally, and (d) introducing new product offerings.

“We value ZAGGLE on FCFF basis with assumptions for net revenue CAGR over (a) FY24E-FY27E at 47%, (b) FY27E-FY34E at ~19%, and (c) FY34E-FY44E at ~10%. Additionally, we see EBITDA margins expanding from 9.1% in FY26E to 14.7% by FY35E and then holding up around ~15%. With a WACC assumption of 12.6%, terminal growth rate of 5% post 20 years of high growth, we value ZAGGLE at ~ ₹49bn,” the brokerage said.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.