IPO listing: Zaggle opens flat; Samhi Hotels debuts at 7% premium

The primary market continues to see surge in initial public offerings (IPOs) with two mainboard companies, Zaggle and SAMHI Hotels, making their debut on stock exchanges today. With this, a total of five mainboard IPOs were listed this week, including RR Kabel, EMS, and Jupiter Life Line, while Jiwanram Sheoduttrai and Unihealth Consultancy made their debut on the NSE SME platform.

Fintech firm Zaggle Prepaid Ocean Services made a flat debut on exchanges, while shares of SAMHI Hotels, the owner of the largest number of Marriott and IHG -operated hotels in India, listed at nearly 7% premium over the issue price.

Shares of Zaggle listed at ₹164 on the NSE, at par with the issue price. On the BSE, the stock was listed at ₹162, a discount of 1.2% over the IPO price of ₹164 per share. Post listing, the stock gained some momentum and rose as much as 4% to ₹170.7 on the BSE, while the market capitalisation increased to ₹2,071 crore.

Meanwhile, shares of SAMHI Hotels opened 6.7% higher at ₹134.5 against its IPO price of ₹126 apiece on the NSE. On the BSE, the stock listed at a premium of 3.6% at ₹130.5 over the issue price. Post listing, the stock hit high and low of ₹133 and ₹127.45, respectively, on the BSE, while the market capitalisation stood at ₹2,858 crore at the time of reporting.

The IPO listings were mostly in line with D-Street expectations as these two companies received tepid response for their public offers.

“Zaggle is a uniquely positioned player in the fintech industry, but it has a major dependency on third parties and has faced negative cash flow and a decline in its profitability in recent years. The IPO valuation was also high. Investors should exit their positions, but those who want to hold for some gain should maintain a stop loss at 148,” says Shivani Nyati, Head of Wealth, Swastika Investmart Ltd.

On SAMHI Hotels, Nyati says, “The company is loss-making, and its financial performance has been poor for the last three years. On the other hand, the company is making progress on cutting losses, and the sales multiple is 3.7X, which is below the industry average. Investors should book profit and exit their position, and those who still want to hold should maintain a stop loss at the listing price.”

The IPO of Zaggle was subscribed 12.86 times, with the quota reserved for Qualified Institutional Investors’ (QIBs) booking by 16.94 times. The portion for Non-Institutional Investors’ (NIIs) was subscribed 9.16 times and the retail category by 6.15 times.

On the other hand, the issue of SAMHI Hotels was subscribed 5.33 times. The portion reserved for QIBs was booked 8.82 times, while quota for NIIs and retail investors were subscribed 1.22 times and 1.11 times, respectively.

Zaggle, the Mumbai-based fintech-SaaS, raised ₹563 cr via IPO, which comprised a fresh issue of equity shares worth ₹392 crore and an offer for sale of 1.04 crore shares by promoters and existing shareholders. The funds raised from the issuance of fresh equity shares will be used for customer acquisition and retention, development of technology and products, payment of debt and for general corporate purposes. It intends to use ₹300 crore for customer acquisition and retention over three financial years from FY24 to FY26; ₹40 crore for the development of technology and products; ₹17.08 crore to repay debts; and remaining capital for general corporate purposes. As of March 2023, Zaggle had total outstanding borrowings of ₹90.03 crore.

Meanwhile, the Gurugram-based hotel asset company SAMHI Hotels garnered ₹1,370 crore via IPO at a price band of ₹119-126 per share. In an interaction with Fortune India, Ashish Jakhanwala, Chairman, Managing Director and Chief Executive Officer of SAMHI Hotels, said that most of the IPO proceeds (around ₹1,100 crore) will be used to repay debt. As of March 31, 2023, the total debt of the company stood at ₹2,833 crore, which will come down to ₹1,730 crore, post listing of shares on the exchanges.

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