Zinka Logistics IPO: Subscribed over 30% so far; here's why analysts suggest to avoid

Zinka Logistics Solutions IPO: The initial public offering of Zinka Logistics Solutions, also known as BlackBuck opened for subscription on November 13, 2024. It will conclude on November 18, the longest bidding process among recently launched IPOs.

Subscription status

On November 14, 2024, the second day of the bidding process, it was subscribed 31 per cent and received a bid of 70,67,682 shares against 2,25,67,270 shares at 3:51 PM, according to the BSE website. The retail individual investors (RIIs) category applied for 36,27,234 shares or 87 per cent, while the non-institutional investors (NIIS) category applied for 2,08,116 shares or 3 per cent.  Meanwhile, qualified institutional buyers subscribed for 26 per cent or 30,97,602 shares.

In terms of allocation, RIIs, NIIs, and QIBs categories have 41,89,783 shares, 62,84,674 shares, and 1,20,66,813 shares, respectively.

Heena Arora Agarwal of Fundvice said the IPO continues to capture attention as it solidifies the company’s position in the competitive logistics sector. "Investors remain keen on the company's innovative technology and proven track record, seeing strong potential in its strategic expansion plans," she said.

Key Details; price band, issue size, allotment & listing dates

Allotment date

The expected allotment date of the Zinka Logistics IPO is November 19, 2024. It means investors can check their status on the next day i.e. November 20. As soon as the shares are credited into their (applicants) demat account the stock will debut on the bourses on November 21, 2024.

Issue size

The issue price of the BlackBuck IPO is Rs 1,114.72 crores which contains 2.01 crore shares for a fresh issue worth Rs 550.00 crores and 2.07 crore shares allocated for offer for sale with a value of Rs 564.72 crores. The price band of the IPO is fixed between Rs 259 and Rs 273.

Here are other details of the BlackBuck IPO:

• BRLMs: Axis Capital Ltd, Morgan Stanley India Company Pvt Ltd, JM Financial Ltd, and IIFL Capital Services Ltd
• RegistrarL Kfin Technologies Ltd

Why should investors avoid it?

Analysts from domestic brokerages have suggested avoiding BlackBuck IPO. According to SBI Securities' analysts due to the higher price band valuation of 13.1x FY25E they recommend to 'avoid' the issue. Similarly, KRChoksey has also suggested investors to 'avoid' it. "The company's heavy reliance on payments and telematics revenue makes it vulnerable to rising competition and pricing pressures, which could impact profitability," the brokerage said.

"Because of heavy reliance on payments and telematics, revenue makes it vulnerable to rising competition and pricing pressures, which could impact profitability. The brokerage also noted, "Unlike its peers, the logistic company remains loss-making even at the EBITDA level, with financial stability under pressure over the past three years."