Ashish Kacholia Portfolio Stock Zaggle Hits 10% Lower Circuit for 2nd Day – What’s Behind the Fall?
Ashish Kacholia: Shares of Zaggle Prepaid Ocean Services have been in freefall, locking into the 10% lower circuit limit for the second consecutive session on Tuesday, February 11. The steep decline follows the company’s third-quarter (Q3 FY25) earnings report, which, despite showing strong revenue and profit growth, has spooked investors due to a sharp rise in expenses.
The stock, which is a part of ace investor Ashish Kacholia’s portfolio, has lost nearly 25% in the last four sessions. Let’s dive deeper into what’s driving this selloff and whether investors should be worried.
Zaggle’s Q3 FY25 Performance: Strong Revenue, Rising Expenses
Zaggle Prepaid Ocean Services announced its Q3 FY25 results on Friday evening, February 9, post-market hours. The company posted record revenue and profit growth, but a significant rise in expenses raised concerns among investors.
Key Highlights of Q3 FY25 Earnings:
- Revenue: ₹336 crore (up 68.6% YoY) – highest-ever quarterly revenue
- Profit After Tax (PAT): ₹20 crore (up 33% YoY)
- EBITDA: ₹29 crore (up 45% YoY)
- Operating Expenses: ₹308 crore (up 72% YoY)
While the revenue and profitability numbers were impressive, the 72% jump in operating expenses overshadowed the positive aspects of the results. This surge in costs, primarily driven by higher employee expenses and expansion-related costs, led to negative sentiment around the stock.
Why Did Expenses Surge?
According to Zaggle, the rise in expenses was mainly due to:
- Higher employee costs due to workforce expansion
- Increased incentives and cashback expenses
- Operational expenditures linked to business expansion
- Expected ESOP (Employee Stock Ownership Plan) expenses of ₹95-100 million for FY25
While these expenses indicate growth investments, investors were seemingly unimpressed, leading to aggressive selling in the stock.
Zaggle Share Price Tumbles: 10% Lower Circuit for Two Days
The stock has been falling for four straight sessions, with the last two trading days witnessing a 10% lower circuit. Here’s how it performed in recent sessions:
| Date | Closing Price (₹) | % Change |
|---|---|---|
| Feb 11, 2025 | 381.90 (Lower Circuit) | -10% |
| Feb 10, 2025 | 424.30 (Lower Circuit) | -10% |
| Feb 9, 2025 | 471.45 | -7% |
| Feb 8, 2025 | 507.50 | -5% |
At its latest closing price of ₹381.90, the stock has lost almost 25% in just four days, raising concerns about investor confidence.
Ashish Kacholia’s Stake in Zaggle
Zaggle is one of the stocks in Ashish Kacholia’s portfolio, known for his picks in mid and small-cap companies. As per the December 2024 quarter, Kacholia held a 1.73% stake in Zaggle through his investment firm Bengal Finance and Investment.
Despite the stock’s recent correction, Kacholia’s long-term conviction in the company suggests that it remains a potential growth story. However, it remains to be seen whether he decides to hold or reduce his stake after the recent selloff.
Financial Ratios of Zaggle Prepaid Ocean Services
Here’s a look at some key financial ratios that investors should consider:
| Financial Metric | Value |
|---|---|
| Revenue Growth (YoY) | 68.6% |
| Profit Growth (YoY) | 33% |
| EBITDA Growth (YoY) | 45% |
| Operating Expense Growth (YoY) | 72% |
| PAT Margin | 5.95% |
| EBITDA Margin | 8.63% |
| P/E Ratio (TTM) | 34x |
| Debt-to-Equity Ratio | 0.24 |
The sharp rise in expenses has impacted profit margins, which could explain the negative investor sentiment. Additionally, a high P/E ratio of 34x suggests the stock was already trading at premium valuations before the recent correction.
What’s Next for Zaggle?
The current correction in Zaggle’s share price is largely due to investor concerns over rising expenses. However, the company’s strong revenue and profitability growth indicate a fundamentally sound business with long-term potential.
Key Factors to Watch Going Forward:
- Management Commentary on Cost Control: If the company reassures investors about managing expenses efficiently, sentiment could improve.
- ESOP Expenses Impact: How much ESOP-related expenses weigh on overall profitability will be a key factor in the coming quarters.
- Investor Confidence: Whether Ashish Kacholia and other institutional investors retain their stake will influence future stock movement.
- Technical Support Levels: If the stock finds support around ₹375-₹380, it may stabilize; otherwise, further downside is possible.
Final Thoughts: Should Investors Be Worried?
While the sharp fall in Zaggle’s share price may be concerning in the short term, the company’s strong revenue growth and profitability suggest it is still on a growth path. The market’s reaction appears to be a knee-jerk selloff due to higher expenses, rather than a fundamental weakness in the business.
For long-term investors, this correction could present a buying opportunity if the stock stabilizes at lower levels. However, short-term traders should be cautious, as volatility is expected to continue.
Would you buy the dip on Zaggle, or do you think the selloff will continue? Let us know your thoughts in the comments!
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.