In a shift from the recent trend of robust initial public offerings (IPO), SAMHI Hotels and Zaggle Prepaid made somewhat lackluster debuts on Friday. SAMHI Hotels, a prominent hotel ownership and asset management platform in India, opened with a modest 8% premium, while Zaggle Prepaid, an innovative fintech firm in the B2B2C segment, launched at its issue price.
SAMHI Hotels has been grappling with financial difficulties over the past three years despite having the third-largest inventory of operational keys in India as of February 2023. The company's revenue more than doubled to INR 738 crore for the year ending March 2023. However, it also reported a loss of INR 338.5 crore during the same period, indicating a challenging business environment compared to other listed peers such as Chalet Hotels and Indian Hotels.
Meanwhile, Zaggle Prepaid, backed by notable investor Ashish Kacholia, has carved out a niche in the Indian market with its combined solution for spend management through prepaid cards and employee management via Software-as-a-Service (SaaS). Despite this unique positioning, the company has faced negative cash flow and declining profitability. It recorded a revenue growth of 49% in FY23 to INR 553 crore but saw net profit drop to INR 22.9 crore, nearly half compared to the previous year.
Analysts have voiced concerns about both companies' IPOs due to their aggressive pricing and challenging financial situations. For Zaggle Prepaid, significant reliance on third parties and fierce competition within the fintech industry could affect future earnings. For SAMHI Hotels, concerns revolve around poor financial performance in recent years, negative net worth, and increased borrowing.
Investors who received allotments are advised to consider booking profits on the listing day for both companies and to closely monitor their financial performance over the next few quarters before making further investment decisions.
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