Zaggle Prepaid’s stock has made headlines recently, with a 5% surge in its price over the past month, largely fueled by a series of strategic order wins and acquisitions. On April 2, the share price saw a further 3% increase following an exciting partnership with Truecaller International LLP. However, despite these upward trends, the small-cap stock still trades about 40% lower than its 52-week peak of ₹597. This raises an important question for investors: is now the right time to consider buying into Zaggle?

A Promising Fundamental Outlook

Bajaj Broking has recently initiated coverage on Zaggle Prepaid, issuing a ‘Buy’ rating with a target price of ₹456, suggesting a potential upside of 30%. This optimistic forecast stems from Zaggle’s aggressive growth strategy, which includes strategic acquisitions and a diverse product lineup. Notably, the company recently acquired a 26% stake in a UPI switch provider and has plans to increase this to 42%.

• New Ventures: Zaggle is expanding into fleet management through its subsidiary, Zatix, while also exploring international payment solutions.
• Mergers and Acquisitions: The company is eyeing potential mergers to enhance its offerings.

These initiatives underscore Zaggle’s ambition to solidify its position as a frontrunner in the fintech industry.

Strong Position in the Fintech Landscape

Bajaj Broking emphasizes that Zaggle is well-positioned in India’s rapidly growing fintech market. Key factors contributing to this include:

• Robust Partnerships: Collaborations with leading banks.
• Diverse Revenue Streams: Multiple avenues for income generation.
• Aggressive Growth Targets: Aiming for a 58-63% revenue boost driven by increased corporate adoption.

The company also aspires to achieve an EBITDA margin of 15-16% in the next four years, showcasing its dedication to profitability. "Zaggle offers a captivating investment opportunity. With an estimated FY27 EPS of ₹14.72 and a PE multiple of 31x, we recommend a BUY on the stock with a target price of ₹456," stated Bajaj Broking.

Technical Analysis Insights

Technical analysts are also keeping a close eye on Zaggle’s share performance. Rajesh Bhosale, an Equity Technical and Derivative Analyst at Angel One, noted that since February, Zaggle’s share prices have oscillated between ₹320 and ₹380, forming a channel pattern.

• Key Levels: A breakout above ₹380 could lead to an upward movement towards ₹425.
• Conversely, a drop below ₹320 may see prices retreat to ₹285.

Anshul Jain, Head of Research at Lakshmishree Investment and Securities, pointed out that after a peak at ₹590, Zaggle’s share price experienced a 46.45% correction over ten weeks. Currently, the stock is trading between ₹376 and ₹315, forming a rectangle pattern.

• Future Projections: A breakout or breakdown from this range will determine the next price movement.

However, Jain cautioned that with the 10, 20, and 50-day EMAs trending downward, the rectangle might indicate a continuation pattern, increasing the likelihood of a breakdown below ₹315. Traders are advised to monitor for volume expansion as a confirmation of any breakout direction.

Conclusion

With a combination of strategic growth initiatives and pivotal technical indicators, Zaggle Prepaid presents a fascinating case for investors. As the fintech landscape evolves, this stock might be worth considering, especially if it capitalizes on its current momentum. Would you take the plunge into this promising investment?