B&K Securities initiates coverage on Zinka Logistics; check rating and target price

B&K Securities has initiated coverage on Zinka Logistics Solutions, more commonly known as BlackBuck, with a target price of Rs 569. The firm highlights BlackBuck's significant presence in the trucking ecosystem, where it provides a multitude of services such as payments, telematics, and financing. BlackBuck serves over one million truckers, which accounts for approximately 30% of all truckers in India. Notably, the company processes about 40% of all trucking toll transactions, establishing itself as the largest provider of GPS devices in the sector, said B&K Securities.
 

The core of BlackBuck's business revolves around tolling and telematics, operating on commission and subscription models, respectively. The company's tolling service offers superior resolution, addressing inaccuracies much quicker than traditional methods. BlackBuck has achieved operating leverage, with adjusted EBITDA margins improving to approximately 27% in the third quarter of FY25, compared to losses four quarters earlier. This improvement underscores BlackBuck's ability to generate efficient growth through its digital solutions, noted the brokerage.
 

Zinka Logistics Solutions launched its Rs 1,114.72 crore IPO in November 2024 as the company issued its shares for Rs 273 apeice. The stock soared nearly 9 per cent on Tuesday to Rs 441, while it is up 62 per cent from its IPO price. The company's total market capitalization stood close to Rs 8,000 crore.

BlackBuck's re-entry into the intermediary space between shippers and truckers comes with new insights, aiming to capture a larger market share. The company's subscription model ensures customer retention at a low marginal cost, supporting a revenue CAGR of over 50% from FY22 to FY25. These developments reflect BlackBuck's strategic efforts to fortify its position in the market while ensuring sustainable growth, B&K said.

The company's valuation aligns with its robust platform, combining digital classifieds with local servicing infrastructure. BlackBuck's subscription model and access to real-time data on 25% of India's truck fleet position it for continued expansion. B&K Securities values the company at 42 times the FY27E P/E, reflecting confidence in its growth trajectory and the sustainability of its business model in a competitive landscape.

Despite the positive outlook, B&K Securities notes potential risks associated with incremental investments that could limit operating leverage. Nevertheless, the firm's target price of Rs 569 implies a strong belief in BlackBuck's future performance, driven by its innovative approach and market leadership in the logistics sector, it said.