Zeal Global Services Limited IPO - Review, GMP, Valuation & Dividends

Zeal Global Services Limited - Complete Overview

Established in 2014, Zeal Global Services Private Limited specializes in providing logistics solutions in the Air Cargo Industry.

Headquartered in Delhi, the company also maintains a presence in major locations such as Mumbai. It operates as a General Sales and Service Agent ("GSSA") and sales partner for airlines in the region.

The company's mission is to offer cost-effective freighting solutions that cater to the ever-changing needs of various industries, including fashion, pharmaceuticals, automotive, and industrials.

To enhance its operations and expand its business, the company has made strategic investments, including a 33% stake in the Joint Venture named Teleport Commerce IN Private Limited.

Zeal Global Services serves clients in multiple countries, spanning India, China, the Middle East, Sri Lanka, Singapore, and Malaysia.

 

What does the company do?

Zeal Global Services Ltd is involved in offering logistics solutions in the Air Cargo Industry.

 

 

Company Products

The company operates in two main verticals:

• Cargo Carrier Service
• Passenger Carrier Service

Additionally, it provides support services to its customers, which encompass:

• Sales
• Marketing
• Administration
• Operations

 

IPO Overview

Zeal Global Services Ltd, an upcoming SME IPO, is set to open for subscription from 28th July 2023 to 1st August 2023. The Zeal Global Services IPO's share price is Rs 103 per share, and it is expected to be listed on the stock market on 9th August 2023.

The IPO offers 1,200 shares in one lot, with retail investors allowed to bid for a maximum of 1 lot. The total issue size of the IPO is 3,540,000 shares, aggregating up to Rs. 36.46 Crores.

 

Zeal Global Services Limited IPO timetable (Tentative)

EVENTS	DATE
IPO Opening Date	28 July 2023
IPO Closing Date	01 August 2023
IPO Allotment Date	04 August 2023
Refund initiation	07 August 2023
IPO Listing Date	09 August 2023

 

Zeal Global Services Limited IPO Details

IPO Opening & Closing Date	28 July 2023 to 01 August 2023
Face Value	Rs. 10 Per Share
Issue Price	Rs. 103 Per Share
Lot Size	1200 Shares
Price of 1 Lot	Rs 123,600
Issue Size	3,540,000 Shares  (aggregating up to Rs. 36.46 Cr)
Offer for Sale	NA
Fresh Issue	3,540,000 Shares  (aggregating up to Rs. 36.46 Cr)
Listing at	NSE SME
Issue Type	Fixed Price Issue IPO
Registrar	Skyline Financial Services Pvt. Ltd.

 

Zeal Global Services Limited IPO Lot Details

Minimum Lot Investment (Retail)	1 Lot
Maximum Lot Investment (Retail)	1 Lot
Minimum Lot Investment (HNI)	2 Lot

 

Zeal Global Services Limited IPO Reservation

Institution Portion	NA
Non-Institution Portion	NA
Retail Portion	NA

 

Company Financial

Amount in Lakhs

Period	FY 21	FY 22	FY 23
Total Assets	1893.07	3194.82	4969.26
Total Revenue	6094.93	12,127.77	9505.38
Net Profit	169.61	524.30	826.65
Net Worth	603.09	1277.22	2115.61
Reserve & Surplus	543.09	1081.82	1920.21
Total Borrowings	171.41	194.32	1243.92

 

Revenue Generated through Domestics Services and Export Services

Amount in Lakhs

Particular	As at January 31, 2023	As at March 31, 2022	As at March 31, 2021
(i) Type of Services
Air freight services	8,732.95	12,109.40	6,058.87
Air passenger services	762.36	-	-
Total revenue from contracts with customers	9,495.31	12,109.40	6,058.87
(ii) Geographical information
Air freight services
Within India	7,981.33	10,963.94	5,432.74
Outside India	751.61	1,145.46	626.12
Air passenger Services
Within India	599.04	-	-
Outside India	163.32	-	-
Total revenue from contracts with customers	9,495.31	12,109.40	6,058.87

 

Objective of the Issue

The company intends to utilize the funds for the following objectives:

• Fulfilling working capital requirements.
• Making investments in its subsidiaries to expand its business.
• Partially repaying debt.
• Addressing general corporate needs.
• Covering issue-related expenses.

 

Promoters and Management of Zeal Global Services Limited

The company is led by experienced promoters: Mr Nipun Anand, aged 30 years, serves as the Whole Time Director and chairman, while Mr Vishal Sharma, aged 51 years, holds the position of Whole Time Director and MD of the company.

Pre-issue Promoters Holding	100%
Post-issue Promoters Holding	NA

 

Peer Comparison

The company has not compared itself with any listed peers as per the Zeal Global Services RHP. However, the company has provided a peer comparison with a list of private unlisted groups, which is an unusual approach and possibly the first of its kind in such documents.

Particulars	FY 22	FY 21	FY 20
Hercules Aviation Private Limited
Revenue	19,183.89	13,462.53	13,503.17
PAT	1,452.35	915.8	547.42
Net Worth	4,950.3	3,497.94	2,582.14
EPS (in Rs.)	72.62	45.79	27.37
Planit Travglobal Private Limited
Revenue	10,330.39	5,417.15	1,654.71
PAT	649.92	426.57	185.79
Net Worth	1,326.34	738.72	674.22
EPS (in Rs.)	469.43	232.83	76.32
Zeal Global Services Limited
Revenue	12,109.40	60,58.87	7,648.89
PAT	722.45	188.32	126.36
Net Worth	705.23	104.77	48.07
EPS (in Rs.)	6.97	2.26	1.78

 

IPO's Valuations

To assess ZGSL IPO valuations, we can utilize the data provided by the company in its document. The company's net worth in FY 23 was 2115.61, with an EPS of Rs. 8.46 per share as of January 2023, and a P/E ratio of 12.18. By performing the calculations, we got the share price of Rs.103.

 

Dividend Policy

In the past, the company had a dividend policy and distributed dividends of 35% and 110% for FY 21 and FY 20, respectively. However, subsequent to those years, the company skipped paying dividends. The company may adopt a dividend policy in the future, which will be based on its financial performance and other prospective factors.

 

IPO's Strengths

• Experienced Promoter.
• Scalable Business Model.
• Efficient and skilled team.
• Expertise in handling specialized cargo.
• Established and enduring Customer Relationships.

 

IPO Weaknesses

• Heavy reliance on a few customers and airlines, makes revenue and profitability vulnerable to the loss of any of them.
• Inadequate insurance coverage.
• The business heavily relies on a continuous relationship with IATA Agents for sales, and any reduction or interruption in their business could negatively impact the Company's revenues and operations.
• Lack of long-term or exclusive arrangements with dealers or distributors for selling their services.
• A decline in cargo volumes and freight rates due to increased transport capacity potentially affects the Company's financial condition and operations.
• Facing competition from both organized and unorganized players.
• Delays in complying with statutory provisions under various laws, which may result in penalties.
• The limited number of airlines as clients.
• Historical instances of delays in EPF payments and GST returns, potentially impacting the company's financial performance and regulatory compliance.
• The Company's FY 2022 annual reports include qualifications/remarks in the Companies Auditor's Report Order (CARO) Report.
• Pending outstanding legal proceedings against the Company and its Directors.
• Negative cash flows in the past.

 

 

IPO GMP

As of 26 July 2023 Zeal Global Services Limited IPO GMP is Rs. 5.

 

Conclusion

Zeal Global Services Ltd operates in a fiercely competitive segment, and its performance in FY 20 and 21 has been moderate. The company's last 22 years of performance may appear somewhat embellished to justify higher pricing. Moreover, the GMP of the IPO is also average. Investors might consider investing in the IPO after conducting a thorough analysis.

 

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To Read the Prospectus of the Company Click Here to Download the RHP

 

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