Zaggle plummets to 52-week low after disappointing Q1 results

Mumbai: Shares of management solutions provider Zaggle Prepaid Ocean Services dropped to their lower tradable limit of the day, making a fresh 52-week low, after disappointing quarter numbers from the fintech spooked investors.

Zaggle ended at ₹160.48 on Monday, down 20%, while the Nifty 50 and Nifty 500 dropped 0.3% and 0.1%, respectively.

"The sharp fall today is largely a delayed reaction. Zaggle announced its June quarter results after Friday's close, so Monday was the first chance for the market to respond, and the response was severe," said Raj Gaikar, research analyst, Samco Securities.


Gaikar said the company's profit shrank even as revenue grew on a yearly basis, mainly because costs from a recent acquisition landed before the revenue it will bring.

"The deeper concern is not this quarter. For the past few years, Zaggle's reported profits have not been matched by actual cash generation," he said.

The stock is now down 53.8% this year, against Nifty 500's decline of 1.4%.

Read more: Investors pile into small, mid-caps as earnings momentum improves

"When Zaggle first listed, management previously focused on profitable growth which is now entering into a phase of transformation through consolidation. This transition has increased costs, as acquisition-related expenses, rising employee costs, and new operating charges have led to a significant dip in its earnings before interest, taxes, depreciation, and amortization (EBITDA)," said Arijit Malakar, equity research analyst, Ashika Stock Broking.