AGS Transact Technologies Ltd., among the largest integrated omnichannel payment solution providers in India, will sell shares at Rs 166-175 apiece in its three-day initial public offering that opens on Wednesday.
The IPO comprises an offer for sale of Rs 680 crore by its promoter and selling shareholders. The company has scaled down the offering from Rs 800 crore, at the time of filing the draft red herring prospectus.
It's seeking a market value of Rs 2,106.9 crore at the upper end of the price band. The promoter and selling shareholders are offering a 32.28% stake in the IPO; following the share sale, the promoter's stake will fall to 66.5%.
The issue opens on Jan. 19.
The issue closes on Jan. 21.
Issue size: Rs. 680 crore.
Face value: Rs 10 apiece.
Lot size: 85 equity shares and multiples
listing on the BSE and NSE.
Lead managers: ICICI Securities, HDFC Bank, JM Financial.
The company is an integrated omnichannel payment solutions provider in India in terms of providing digital and cash-based solutions to banks and corporate clients. It provides customised products and services comprising ATM and customer relationship management outsourcing, cash management, and digital payment solutions, including merchant solutions, transaction processing services, and mobile wallets.
At the end of March 31, 2021, it was the second largest company in terms of revenue from ATM-managed services under the outsourcing model, both in terms of revenue and number of ATMs replenished.
At the end of August 31, 2021, it deployed 2,21,066 payment terminals, including 28,986 point-of-sale terminals at OMC outlets.
At the end of August 2021, 95.9% of its revenues came from India (Rs 753.4 crore). Nearly 34% of the revenues are from three banks—ICICI Bank Ltd., Axis Bank Ltd., and Bank of Baroda. At the end of August 31, the top 10 customers account for 61.4% of all revenues.
The company has a capex requirement of Rs 150–200 crore and it hopes to generate it from internal accrual.
It operates businesses in the following segments:
Payment Solutions: Comprises ATM and CRM outsourcing and managed services, cash management services, interoperable cash deposits, digital payment services which include toll and transit solutions, Fastlane, transaction switching services, services through PoS machines, and agency banking. It provides services to banks that include ICICI Bank Ltd., Axis Bank Ltd., HDFC Bank Ltd., Bank of Baroda and Federal Bank Ltd.
Banking Automation Solutions: Comprises tools for sale at ATMs and CRMs, currency technology products and self-service terminals, and related services and upgrades. As of Aug. 31, 2021, it had around 50 banking customers, including ICICI Bank, HDFC Bank, and Axis Bank.
Other Automation Solutions: For customers in the retail, petroleum, and paints and colors sectors includes customers like Hindustan Petroleum Corp., Bharat Petroleum Corp., and Indian Oil Corp. in the petroleum retail sector, and Asian Paints Ltd., Berger Paints Ltd., and Kansai Nerolac Paints Ltd. in the paint dispensing machines segment.
The company earned a revenue from operations of Rs. 753.4 crore. It had an Ebitda of 25.8% and posted a loss of Rs 18.10 crore for the five-month period ended August 31, 2021, due to COVID restrictions during April-June 2021.
The COVID-19 pandemic has had and may continue to have certain adverse effects on business, operations, cash flows, and financial condition.
It derives a significant portion of its revenues from customers in the banking sector in India. Consequently, any adverse development in the growth or usage of the number of automated teller machines in India could have an adverse effect.
It derives a substantial portion of its revenue from a limited number of customers. If one or more of its top customers were to suffer a deterioration in their business, cease doing business with the company, or substantially reduce its dealings, its revenue could decline.
A decrease in the use of cash as a mode of payment could have an adverse effect on business, results of operations, cash flows, and financial condition.
It undertakes fee-based activities, and its financial performance may be adversely affected by an inability to generate income from such activities.
The industry it operates in is highly regulated by the RBI and other government agencies. Implementation of new regulations or changes to existing laws and regulations regarding services could have an adverse effect on business, results of operations, cash flows, and financial condition.