The issue is entirely an offer for sale from the promoters, who will offload equity shares worth Rs 680 crore. The company earlier intended to raise Rs 800 via its primary offering.
Promoter Ravi B Goyal will offload shares worth Rs 677.58 crore. Other shareholders — V.C. Gupte, Shailesh Shetty, Nikhil Patiyat and Rajesh Harshedrai Shah — will offload the remaining stake.
Marwadi Shares and Finance said considering the FY-21 adjusted EPS of Rs 4.55 on a post-issue basis, the company is going to list at a P/E of 38.46x with a market cap of Rs 2,106.9 crore. The brokerage has given a ‘subscribe with caution’ rating to the IPO, saying high debt in the books of the company keeps us cautious from a long term perspective.
AGS Transact Technologies is selling its shares in the fixed price band of Rs 166-175 apiece. The issue can be subscribed till Friday, January 21. It is the first primary issue to hit Dalal Street for the year 2022.
The company is one of the country’s leading omnichannel payment solution providers and primarily operates in banking automation solutions, payment solutions and other automation solutions.
On FY21 financials, the IPO is valued at 6x EV/EBITDA and 1.5x EV/sales, compared with this, CMS at CMP trades at 14.5x EV/EBITDA and 3.3x EV/sales.
AGS continues to focus on developing customized in-house solutions, infrastructure and technological capabilities, and has a long-standing relationship with global technology providers, said Reliance Securities.
In view of the market leadership in ATM managed services and cash management with healthy margins and high return ratios, niche product offerings, strong industry growth and valuation at a discount to peers, the brokerage has suggested to subscribe to the issue.
AGS Transact Technologies raised Rs 204 crore from anchor investors as the company allotted over 1.16 crore equity shares to anchor investors at Rs 175 apiece, according to a circular uploaded on BSE website.
Ashoka India Equity Investment Trust Plc, Kuber India Fund, Saint Capital Fund, IIFL Special Opportunities Fund, Abakkus Growth Fund, HDFC Mutual Fund (MF), Nippon India MF and Quant MF were among anchor investors.
“We believe AGS provides an opportunity to invest in a cash-cum-digital play from a long-term perspective,” said Anand Dama of Emkay Global, adding that the IPO is priced in line with peers. He gave a ‘subscribe’ rating for the issue.
Dama said at the higher price band, the stock is valued at 3.7x FY21/3.8x annualized FY22E BV, similar to its peers like CMS Info Systems trading at 4.4x FY21/3.7x annualized FY22E BV and SIS with multiple business lines trading at 3.7x FY21 BV.
With ease in pandemic restriction, anticipating a ramp-up in ATM deployments by banks and evolution in the digital payment space, we feel the company is well placed to benefit from its diversified portfolio, varied customer base and multiple revenue streams, said Choice Broking, which has a ‘subscribe for long-term’ rating for the issue.
The company stands in the second position in terms of revenue from ATM managed services. AGS Transact is the largest deployer of POS terminals at petroleum outlets in the country.
It has a presence in other markets in Asia including Cambodia, Singapore, the Philippines, Indonesia and Sri Lanka. The firm primarily operates in 3 business segments including payment, banking automation and other automation solutions.
“AGS Transact derives the majority of its revenues by providing various services to the banking sector. However, CMS Info systems is engaged in cash management services which accounted for 60 per cent of AGS Transact’s revenues,” said Angel One.
AGS has high client concentration with top three customers accounting for 33.6 per cent of revenues and has reported a loss for the first five months of FY 2022, it added with a ‘Neutral’ rating over the issue due to premium valuations, high client concentration and financial losses.
The company reported a net profit of Rs 54.79 crore in the fiscal year 2020-21, compared to a profit of Rs 83.01 crore in the previous fiscal. The revenue of the company dropped to Rs 1,797.15 crore in FY21 from Rs 1,883.52 crore in FY20.
For the period ended August 31, 2021, the company reported a net loss of Rs 18.10 crore with a revenue of Rs 762.30 crore.
The quota for retail investors AGS Transact IPO is fixed at 35 per cent of the net offer. QIB quota is fixed at 50 per cent while for NII the quota is reserved at 15 per cent.
HDFC Bank, ICICI Securities, and JM Financial are the merchant bankers to the issue, whereas Link Intime India has been appointed as the registrar to the issue.
