Zaggle Stock Surges 51% in 3 Months: Acquisitions & Partnerships Fuel Future Growth Amid Market Volatility

Zaggle Prepaid Ocean Services, a company that provides SaaS-based employee spend management services for businesses, has seen its stock price rise by 28% in the last month and 51% over the past three months. The company’s growth has been supported by recent acquisitions and partnerships, which are expected to further drive future performance. As a result, analysts have increased their earnings per share (EPS) target for the next two years by 5-8%. Despite a weak market that saw key indices fall by 2%, Zaggle’s stock still gained 2.3% on Thursday.

Diverse solutions and client base

Zaggle was founded in 2011 and offers solutions for managing business expenses, employee rewards, incentives, and customer engagement, including gift card management. Its clients span various industries, including banking, finance, manufacturing, healthcare, technology, consumer goods, and automobiles. The company provides a customizable platform based on client needs, which has helped it maintain a high client retention rate.

IPO success and stock surge

In September 2023, Zaggle launched its IPO, raising ₹563 crore through a mix of ₹392 crore in fresh issues and ₹171 crore in offer for sale, priced at ₹164 per share. Since then, the stock has performed impressively, currently trading above ₹440. This surge is largely attributed to the company’s growth potential following several key deals, partnerships, and stake acquisitions.

Strategic partnerships and acquisitions driving growth

Zaggle recently became the majority shareholder in Span Across IT Solutions, the company behind TaxSpanner, a tax-filing platform. This acquisition will allow Zaggle to expand its services to include TDS and GST tax processing for corporates. Additionally, Zaggle formed a strategic partnership with Founderlink Technologies to provide business loans to companies, their suppliers, and partners through an online marketplace called Recur Club. Zaggle has also acquired a 26% stake in Mobileware Technologies, a provider of UPI-based services for banks.

Improved financial performance and future outlook

In the June 2024 quarter, Zaggle’s performance was strong, with a 113% year-on-year increase in revenue, reaching ₹252.2 crore. Net profit also surged, jumping to ₹16.7 crore from ₹2 crore in the same quarter last year. The company’s operating margin (EBITDA margin) improved by 220 basis points to 8.9%.

Analyst projections

Considering these recent developments, Equirus has raised its EBITDA margin projections for FY26 and FY27 by 40-70 basis points, and its net profit estimates by 4.5-8.5%. The firm has set a target price of ₹595, valuing the stock at 46 times its expected earnings for FY27.