Zarea's upcoming IPO offers big opportunity for investors

Funds raised from the IPO would help Zarea diversify its portfolio beyond its core commodities
An undated image of the Zarea team.— Zarea
An undated image of the Zarea team.— Zarea

Zarea, a leading digital commerce company, is launching an Initial Public Offering (IPO) on the Pakistan Stock Exchange (PSX) to support its expansion in Pakistan's digital economy.

Through this IPO, Zarea aims to raise funds for growth in technology, logistics, infrastructure, and marketing. This move aligns with Zarea’s vision to broaden its offerings and become a comprehensive trading solution for various commodities in Pakistan.

IPO structure and pricing

The IPO would use a book-building method, offering 62.5 million shares priced at Rs16 each. This is seen as an attractive investment, given it represents a 52% discount compared to the technology sector’s average Price-to-Earnings (P/E) ratio of 22.99x on the PSX.

For investors, this means an entry point into a growing company with Potential for strong returns. The entire issue size is divided, with 75% provisionally allotted to successful bidders, while the remaining 25% would be available for retail investors in a public offering.

Funds raised from the IPO would help Zarea diversify its portfolio beyond its core commodities like cement, steel, and building materials to include coal, chemicals, grains, pulses, and agricultural products.

Zarea’s mission is to meet Pakistan's rising demand for efficient and technology-driven trading solutions, allowing it to cater to more customers and widen its impact in the sector.

Zarea’s recent performance reflects its growth potential, with revenue jumping to Rs281 million in FY24, up from Rs115 million in FY23, while its profit surged to Rs292.8 million.

Investors can review the draft prospectus on the PSX website and provide feedback by November 4, 2024. Given the company’s performance and future outlook, the IPO is expected to attract significant investor interest.