The first IPO issue of the calendar year 2022 by AGS Transact Technologies has opened for public subscription. The issue will remain open until January 21, 2022. Here are important pointers about the issue together with analysts' take:
IPO details: IPO size: Rs. 680 crore
Price band: Rs. 166- 175 apiece
The public issue is completely an OFS by current shareholders including the promoter-Ravi B Goyal. Following the IPO, stake of the promoter in the firm will be lowered by 32% as Ravi Goyal offloads 3.8 crore equity shares in the firm worth Rs. 677 crore. Furthermore, public shareholding in the company would increase from the current 1.1% to 33.26%.
QIB quota- ½ of the total IPO reserved for the category
Retail investors quota-35% with 1 Lot size of 85 shares
NII or non institutional investors- 15% of the IPO
Book managers to the issue: HDFC Bank, ICICI Securities, and JM Financial are the merchant bankers to the issue.
Promoter B Goyal who will be offloading equity worth Rs. 677.58 crore would utilize his share of the IPO proceeds for purchasing the VEPL CCPS from AGS Transact. Subsequently, the company would then utilize the proceeds from the sale of VEPL CCPS for redeeming its listed NCDs.
About the company:
Incorporated as AGS Infotech Private Limited, the company began providing banking automation solutions in India in 2004. AGS Transact deployed products from international solution providers and established its own PAN India based service infrastructure and automation solutions expertise to provide related services. Also, the company offers ATM outsourcing and managed services, digital payment solutions, SassS services.
The company's net profit for the Fy 2021 has narrowed down to Rs. 54.79 crore as against Rs. 83.01 crore in the previous financial year. The revenue of the company also registered a decline 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 logged a net loss of Rs 18.10 crore with a revenue of Rs 762.30 crore.
Analysts and Brokerages take on the issue: Aayush Agrawal, Senior Analyst, Swastika Investmart Ltd suggested to 'Avoid' this public issue stating that the company's bottom and top lines have been either weak or muted for the last three years and the share price is slightly higher than its listed peers. It estimated the PE of 38x and P/BV of 3.71x on the NAV of Rs 47.11 for AGS Transact.
"The government's focus on digital payments will further decrease the use and availability of cash can have an adverse effect on business activities," he added.
Angel One's DVP- Equity Strategist, Jyoti Roy said "The company derives majority of its revenues by providing various services to the banking sector. It primarily operates into three segments: Payment Solutions; Banking Automation Solutions; and other Automation Solutions".
Roy stated at the higher end of the price band AGS Transact would be trading at P/E multiple of 38.5xFY21 EPS which is at a premium to what CMS Infosystems shares are available at, Roy pointed out. "We have a NEUTRAL recommendation on the IPO given the premium valuations, high client concentration and losses in first months of FY22," the strategist added.