Zaggle’s downturn in today’s trading following QIP opening yesterday can be attributed to investors’ dilution concerns
The broader market sentiments today also could have contributed to the slump in Zaggle’s shares today
Despite today’s downturn, Zaggle’s stock has increased by 242.28% since its listing in September 2023
Shares of Zaggle
slumped as much as 4.9% reaching INR 533.30 during the intraday trading session today (December 19) after the company opened its qualified institutional placement (QIP) offer to raise INR 950 Cr.
While the stock opened today’s trading session down 3.81% lower at INR 539.95, it was trading at INR 539.00 at 10:37 AM.
By 10:37 AM, the company’s market capitalisation stood at INR 6,633.14 Cr and as many as 4.26 Lakh shares were traded till then.
In the yesterday’s (December 18) announcement, the floor price for the QIP was declared at INR 550.73 per equity share which was a discount of 1.8% from Zaggle’s last closing price of INR 561.35.
Zaggle’s downturn in today’s trading following QIP opening yesterday can be attributed to investors’ dilution concerns. With this 950 Cr QIP, new shares are offered and the existing shareholders face dilution of their ownership percentage. In this particular case of Zaggle, an anticipated equity dilution of around 10.5% to 16% was estimated earlier.
Alongside this, the broader market sentiments today also could have contributed to the slump in Zaggle’s shares today.
It is pertinent to note that the Federal Reserve announced a quarter percentage point cut in its primary interest rate, bringing it to a target range of 4.25% to 4.5%. This further indicated only two additional cuts in 2025, which was a decrease from of 3 rate cuts expected earlier.
Following the above announcements Yesterday, the Indian broader market reacted negatively today with both BSE and NSE indices witnessing sharp declines.
While Sensex was down 1.17% (losing 945.25 points) at 79,245.15 at 11 AM, Nifty 50 was also 1.05 lower (or 253 points down) at 23,945.20 at the above-mentioned time.
Despite today’s downturn, Zaggle’s stock has increased by 242.28% at its previous closing price of INR 561.35 since its listing in September 2023 at INR 164. On a YTD basis, the stock has yielded 148.27% return.
Founded in 2011 by Raj Narayanam, Zaggle provides a spend management and corporate employee benefits platform. It helps businesses automate their accounts and issue prepaid cards, in partnership with banking partners, to reward their employees.
Zaggle offers a diverse portfolio of SaaS products, including tax and payroll software. It claims to have issued 50 Mn prepaid cards in India and served over 3.03 Mn users as of September 30, 2024.
Last month, Zaggle’s MD and CEO Avinash Godkhindi outlined Zaggle’s projected growth rate of 55-60% for FY25, with margins expected to range between 9-10%.
The company posted a consolidated profit after tax of INR 20.29 Cr in the second quarter (Q2) of the financial year 2024-25 (FY25), up 167.67% from INR 7.58 Cr in the year-ago period.
Operating revenue soared 64.21% to INR 302.55 Cr during the quarter under review from INR 184.24 Cr in Q2 FY24.