Zinka Logistics share price hits 5% upper circuit, jumps 87% in less than 3 months; should you buy?

Zinka Logistics share price has been on a solid uptrend of late. Zinka Logistics stock opened at a 5 per cent upper circuit of ₹510.85 on Monday, February 10, extending gains for the 10th consecutive session. On a monthly scale, the stock has jumped nearly 34 per cent in February so far after a 20 per cent decline last month. In December, the stock had surged 78 per cent.

Shares of Zinka Logistics Solutions debuted on the Indian bourses on November 22 last year. At the current market price of ₹510.85, the small-cap stock is up over 87 per cent against its issue price of ₹273 in less than three months.

The transport stock hit an all-time high of ₹548 on December 27 after hitting an all-time low of ₹248.25 on November 27 last year.

Zinka Logistics Solution provides truck drivers with a digital platform called the BlackBuck app. According to reports, as many as 963,345 truck operators nationwide, or 27.52 per cent of all truck operators in India, used the platform to do business during the fiscal year 2024.

The BlackBuck app from Zinka Logistics Solution is a platform that helps truck drivers accomplish their objectives effectively by providing telematics, payments, a freight marketplace, and auto financing options.

Flipkart-backed Zinka Logistics’ initial public offer (IPO), which was open for subscription from 13 November to 18 November, was subscribed 1.87 times.

Zinka Logistics stock: Should you buy?

On February 2, brokerage firm JM Financial initiated coverage on the stock with a buy recommendation, pegging the target price of ₹570, implying 42 times FY27E PER (price-to-earnings ratio).

The brokerage firm pointed out that BlackBuck’s revenue grew at a CAGR of 63 per cent over FY22-24, and the company turned adjusted EBITDA profitable in the second half of the last financial year (H2FY24).

It further underscored that BlackBuck operates an ecosystem-led business model that allows it to acquire consumers through any of the offerings and cross-sell its other services while incurring limited incremental costs. It has an asset-light business model with strong retention that ensures sustained recurring revenues and high contribution margins.

“We forecast it to deliver nearly 31 per cent revenue growth over FY24-29, while the EBITDA margin is expected to reach over 45 per cent. We value the company using DCF-based valuation, resulting in a March 2026 target price of ₹570,” said JM Financial.

“Key risks to our investment thesis include (1) growth slowing considerably in the larger tolling and telematics businesses, (2) scaling challenges in load-matching or vehicle financing businesses, (3) significant disruption to FASTag mechanism via GNSS, and (4) trucking OEMs managing to cordon-off a significant share of telematics market,” JM Financial said.

While the stock could be a long-term bet due to its favourable fundamentals, some technical experts suggest one may consider booking some profit at the current juncture.

According to Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers, Zinka Logistics Solutions stock appears overstretched. It is nearing a critical resistance at ₹555, marked by the R5 Camarilla level, indicating a potential pullback.

“Profit booking is advisable in the ₹545-555 zone, as resistance could trigger selling pressure. Given the overextended move, fresh long positions should be avoided at this stage,” said Patel.

“A healthy retracement could provide better risk-reward opportunities later. Traders should monitor price action near resistance and wait for a more favourable entry. If the stock fails to sustain above ₹555, it may experience a correction. Caution is warranted as stretched rallies often lead to profit-taking and short-term reversals,” Patel said.

Read all market-related news here

Read more stories by Nishant Kumar

Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.