KARACHI: Zarea Limited has applied for listing on the Pakistan Stock Exchange (PSX) with the aim of raising at least Rs1 billion through an initial public offering (IPO) of 62.50 million shares, priced at a minimum of Rs16 per share. The offering will be open to corporate investors, affluent individuals, and retail investors.
As outlined in the prospectus available on the PSX website for public comment, Zarea Limited (ZL) operates as a business-to-business (B2B) e-commerce platform specializing in construction materials such as cement, steel, and agricultural biomass. The company plans to diversify its product range by adding commodities like coal, chemicals, grains, pulses, sugar, fertilizers, cotton, yarn, and other agricultural perishables.
The funds raised from the IPO will primarily be directed towards enhancing ZL’s IT infrastructure and expanding its customer base. According to current regulations, the company’s share price could increase by up to 40% through a Dutch auction (book-building process), potentially reaching a maximum of Rs22.4 per share. This price adjustment could allow ZL to raise a total of Rs1.4 billion through the IPO.
Topline Securities and Growth Securities are serving as joint consultants and book runners for the issuance. This IPO marks the sixth listing on PSX’s main trading platform in 2024. The previous five IPOs collectively raised Rs8 billion, indicating an improving economic climate in Pakistan.
The PSX benchmark KSE-100 Index has surged by 42.5% this calendar year, exceeding 90,000 points, reflecting positive investor sentiment. The profitability of the top 100 companies in the KSE-100 Index increased by 24.4% in FY24, achieving a record high of Rs1.6 trillion.
The prospectus notes that the Rs1 billion proceeds will be allocated towards enhancing technology, infrastructure, logistics, operations, and marketing for ZL’s online platform, as well as capital expenditures (CAPEX).
ALSO READ:
https://flarenews.pk/2024/10/29/watch-babar-azam-welcomed-by-fans-at-melbourne-airport/
ZL has developed a proprietary platform that enables buyers to purchase goods at competitive rates while easily tracking prices through an intuitive interface. The company’s primary goal is to transform and digitize B2B commodity marketplaces and streamline customer-focused operations. Additionally, it offers services such as logistics, storage, credit, and data analytics.
A separate statement from ZL indicates that the shares are priced at a price-to-earnings (P/E) multiple of 10.93x at the floor price of Rs16 per share, based on trailing twelve months (TTM) earnings as of June 30, 2024. This represents a significant discount of around 52% compared to the technology sector’s industry average P/E of 22.99x on the PSX.
For the fiscal year ending June 30, 2024, ZL reported a remarkable 144% increase in revenue, reaching Rs281 million, up from Rs115 million in FY23. Profit after tax also rose significantly to Rs292.8 million in FY24, compared to Rs81.3 million in the previous year.
