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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Non Convertible Debentures (NCD) | 50.00 | ACUITE BBB+ | Positive | Upgraded | Stable to Positive | - |
| Non Convertible Debentures (NCD) | 50.00 | Not Applicable | Withdrawn | - |
| Total Outstanding | 50.00 | - | - |
| Total Withdrawn | 50.00 | - | - |
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Rating Rationale |
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Acuité has upgraded its long term rating of ‘ACUITE BBB’ (read as ACUITE Triple B) to ‘ACUITE BBB+’ (read as ACUITE Triple B Plus) on the Rs. 50.00 Cr. Proposed Non Convertible Debentures of Zaggle Prepaid Ocean Services Limited (Erstwhile Zaggle Prepaid Ocean Services Private Limited) (ZPOSL). The outlook is revised ‘Stable’ to 'Positive'. Acuité has withdrawn the long-term rating on the Rs. 50.00 Cr. Non Convertible Debentures of Zaggle Prepaid Ocean Services Limited (Erstwhile Zaggle Prepaid Ocean Services Private Limited) without assigning any rating as the instrument is fully repaid. The withdrawal is on account of request received from client due to the prepayment of the NCD based on the no due certificate (NDC) recieved from the trustee and in accordance with Acuite's policy on withdrawal of ratings as applicable to the respective facility / instrument. Rationale for the rating The rating action takes into consideration the much improved financial and business risk profile of the company along with the healthy capitalisation levels post the company’s IPO in Sept 23 with a total issue size of Rs. 563.38 Cr. Accordingly, the net worth increased to Rs. 517.36 Cr. as on March 31, 2024 from Rs. 30.99 crores as on March 31, 2023 and has further increased to Rs. 617.52 Cr in H1FY25 . Moreover, Zaggle has posted a revenue of Rs. 553 Cr. in FY23 which has now improved to Rs. 775.6 Cr. for FY24. Zaggle also expanded its corporate customers client base to more than 3200 corporate customers and over 5 crore cardholders for its prepaid card with a 16% market share in transaction value. The company’s revenue stood at Rs. 554.7 Cr. in H1FY25. Therefore, the profitability metrics has improved considerably year on year as PAT has alomost doubled from Rs. 22.90 Cr. in FY23 to Rs. 44.02 Cr. in FY24. Furthermore there has been significant growth in all facets of the business in terms of business operations, bussiness innovation and optimization of the most profit generating products. This has lead to the profitability post tax increasing to Rs. 35.28 Cr. in H1FY25. The rating also continues to derive strength from the extensive experience of the promoters having over two decades of experience in various fields including Fintech, Digital payments and Consulting space. The rating further takes into consideration the innovative product/service offerings by Zaggle in the form of ‘Propel’ - a corporate SaaS platform for channel rewards and incentives, employee rewards and recognition, ‘Save’ - a SaaS-based platform and mobile application expense management solution for business spend management allowing digitized employee reimbursements and tax benefits and 'Zoyer' - a SaaS based platform which is an integrated data-driven business spend management platform with embeded finance capabilities. However, Zaggle is susceptible to competition from domestic as well as international IT service companies which can have bearing on the growth trajectory and earning profile in the coming years. |
| About the company |
| Zaggle Prepaid Ocean Services Limited is a spend management company based in Telangana with a unique value proposition and a diverse user base. Incorporated in 2011, the company operates in the business-to-business-to-customer ("B2B2C") segment with a diverse offering of financial technology ("fintech") products and services, along with prepaid cards and has built a portfolio of software as a service ("SaaS"), including tax and payroll software, and a broad touchpoint reach. The company, with its recent alliance with Yes Bank has launched Corporate credit cards to expand its product portfolio. |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuité has considered the standalone financial and business risk profile of Zaggle Prepaid Ocean Services Limited to arrive at this rating. |
| Key Rating Drivers |
| Strength |
| Experienced management Incorporated in 2011, Zaggle Prepaid Ocean Services Limited is promoted by Mr. Raj P. Narayanam, Founder and Executive Chairman having over two decades of experience in various fields including Financial Services, Prepaid Internet Retail, Loyalty, Merchandising, Reward and Recognition, Open Banking, and Expense Management, Mr. Avinash Godkhindi, Managing Director and CEO having over two decades of experience overseas and in India in Digital Payments, FinTech and Cash Management businesses. The operations of the group is managed by a qualified and well experienced senior management team. This experience has enabled the company to introduce and develop its diverse set of interlinked product offerings. Acuité believes that the management's experience is expected to support the group in improving its business risk profile over the medium term. Innovative product offering with reputed client base ZPOSL major product offerings can be categorized under 'Propel' - acorporate SaaS platform for channel rewards and incentives, employee rewards and recognition; ‘Save’ - a SaaS-based platform and mobile application expense management solution for business spend management allowing digitized employee reimbursements and tax benefits and 'Zoyer' - an integrated data driven business spend management platform with embedded automated finance capabilities in core invoice to pay workflows which is expected to be launched in the current fiscal year. These product offerings cater the business-to-business-tocustomer (“B2B2C”) segment and the "B2B" segment. The company benefits from an ecosystem-based approach across SaaS and fintech which enables them to crosssell products and services in partnership with other players in the operating ecosystems. This integrated product offering along with the experience of the management has helped the company to onboard reputed clientele engaged in sectors such as banking and finance, technology, healthcare, manufacturing, FMCG, infrastructure and automobile industries among others. Some of the reputed clients include names such as Tata Steel, Microsoft India, Infosys, Kohler India, AT&TCommunications India, United Spirits, Greenply Industries. Improving business risk profile ZPOSL has witnessed robust growth in its business operations, revenue scale and its product based clientele. ZPOSL posted a revenue of Rs. 553 Cr. in FY23 which has now improved to Rs. 775.60 Cr. for FY24. Zaggle also expanded its corporate customers client base to more than 3200 corporate customers and over 5 crore cardholders for its prepaid card with a 16% market share in transaction value. The company’s revenue stood at Rs. 554.7 Cr. in H1FY25. Acuité believes that the business risk profile of the company is likely to continue to improve on the back of reputed clientele and diversified product mix over the near to medium term. Improved capital base The company went public in the month of Sept 2023, where the shares were listed on BSE and NSE for the first time. The IPO consisted of a fresh issue of Equity shares worth Rs. 392.00 Cr. and OFS of Rs. 171.38 Cr. aggregating to atotal issue size of Rs. 563.38 Cr. This fresh infusion of equity has bolstered the company’s overall capital position. The increase in capital is has helped the company expand its business and its overall volumes. |
| Weakness |
| Highly competitive nature of the IT industry The global IT services industry is dominated by several large players and small niche technology players. ZPOSL is susceptible to competition from domestic as well as international IT service companies which can have margin pressure. The industry is highly technology oriented which keeps on changing time to time. Thus, the company has to keep upgrading the services it offers according to the needs of the clients and changes in the industry. However, the established relationship with clients and vendors, diversified sectorial presence and experienced management mitigates the risk to some extent. Further, the ability of the company to manage industry specific risks such as wage inflation and employee attrition levels determine the company's ability to sustain its business risk profile and will remain a key rating sensitivity. |
| Rating Sensitivity |
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| Liquidity Position |
| Adequate |
| ZPOSL has adequately matched asset liability profile with no negative cumulative mismatches in the maturity buckets based on ALM as on September 30, 2024. The liquidity including cash, bank balances and unutilized lines stood at Rs 29.40 Cr. as on September 30, 2024. |
| Outlook: |
| Stable |
| Other Factors affecting Rating |
| None |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||
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| Status of non-cooperation with previous CRA (if applicable): |
| Not Applicable |
| Any other information |
| None |
| Applicable Criteria |
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• Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Rating Process and Timeline: https://www.acuite.in/view-rating-criteria-67.htm • Service Sector: https://www.acuite.in/view-rating-criteria-50.htm |
| Note on complexity levels of the rated instrument |
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