Should you be investing in AGS Transact Technologies Ltd IPO?

In this article

• IPO details
• Offer break-up
• IPO Object
• IPO Strengths
• Key Risks
• AGS Transact Company Finance

AGS Transact is one of India’s leading Omni-channel payment solution providers. The firm primarily operates in three business segments:

• Payment Solutions
• Banking Automation Solutions
• Other Automation Solutions (for customers in the retail, petroleum and colour sectors)

It is the second-largest company in India in terms of revenue from ATM managed services and also the largest deployer of POS terminals at petroleum outlets in India. As of March 31, 2021, it had introduced an organization of 207,335 merchant POS, 16,700 petroleum outlets, 72,000 ATMs and CRMs offering cash management services, 46000 cash billing terminals, and introduced 85,700 shading administering machines.

In addition to serving the Indian market, the company also has a footprint in other Asian countries, including Sri Lanka, Cambodia, Singapore, Indonesia, and the Philippines.

IPO Brief

• IPO open from: Jan19th – Jan21th 2022
• Face value: ₹10
• Price Band: ₹166-175
• Market Lot: 85shares
• Minimum Investment: ₹14,875
• Listing on: BSE and NSE
• Total issue size: up to ₹680crores
• Fresh Equity Issue: up to ₹0crores
• Offer for sale: up to ₹680crores
• Promoters: Mr. Ravi B. Goyal and Vineha Enterprises Pvt Ltd
• Book running lead managers: HDFC Bank Limited, ICICI Securities Limited, JM Financial Consultants Private Limited.

What is an IPO and should you invest in them?

Offer Break-up

The offer is broken up into the following investor classes:

Omni-Channel Integrated Payment: The organization is one of the largest integrated Omni-channel payment solutions providers in India as far as giving digital and money-based answers for banks and corporate customers.

Diversified Product Portfolio: AGS generates revenues from a variety of products and services catering to customers across diverse industries such as banking, retail, and petroleum.

Long-Standing Relationships with Technology Providers: The Company has long-standing associations with leading global technology suppliers like Diebold Nixdorf and ACI. Further, they have set up associations with leading Indian financial institutions, such as ICICI Bank Limited, Axis Bank Limited, HDFC Bank Limited, etc.

Dedicated In-house Infrastructure:  Its nationwide service infrastructure helps to serve the customers effectively and efficiently. As of August 31, 2021, they are servicing approximately 446,000 customer touchpoints covering approximately 2,200 cities,

Key Risks

• A limited number of customers: Substantial portion of revenues comes from a limited number of customers. They generate revenues of 14.9%, 12.9% & 5.8%  from ICICI Bank Limited, Axis Bank and Bank of Baroda, respectively.

• Digital Transformation: Company’s significant source of revenue depends on the maintenance and growth of the ATMs.The government’s push toward digital payments could result in a reduced need for cash in the marketplace and a decline in the need for ATMs.

• Legal Proceedings:  There are outstanding legal proceedings with a total amount of more than ₹370 crores that involve the company, directors, subsidiaries and promoters.

• Risk of Fraud and Theft: Cash management and digital payment businesses expose the company to fraud, theft and other security risks and insurance coverage may not adequately protect against these risks.

COMPANY’S FINANCIALS

The company reported a net profit of ₹54.79 crores in the financial year 2020-21 compared with a profit of ₹83.01 crores in the previous fiscal. The revenue of the company dropped to ₹1,797.15 crores in FY21 from ₹1,883.52 crores in FY20. For the period ended on August 31, 2021, the company reported a net loss of ₹18.10 crore with a revenue of ₹762.30 crores.