The markets have recovered from the previous day's steep losses and Nifty is again trading at 16,900 points. Now as the IPO frenzy continues, here is another public issue by CMS Info Systems that has opened for subscription. Here's all about the issue to help you take your investment call on the fresh investment opportunity:
Offer period: December 21-December 23, 2021
Size: Rs.1100 crore
Price band: Rs. 205-216
Bid lot- 69 shares
The issue of CMS Info is a complete offer for sale (OFS) and after the IPO promoters' holding in the company will get reduced to 65.59%. Currently, Sion Investment, an affiliate company of Baring PE holds 100% stake in the firm.
Note this shall be the company's second attempt at going public, earlier in 2017 the company filed draft papers with the market regulator and also got a go-ahead, but did not come up with the public issue then.
BRLM- Axis Capital, DAM Capital Advisors, Jefferies India, and JM Financial
Basis of Allotment date: December 28, 2021
Listing date: December 31, 2021
About CMS Info Systems:
The company is largely managing cash for banks and offers related services including ATM services, and cash pick up and delivery services. The company's offerings as listed on its site include ATM cash management, retail cash management, cash in transit, banking automation, brown label ATM, remote monitoring and multi vendor software etc.
This is a complete offer for sale and hence the IPO proceeds will not be received by the company. All in all through the issue, company's shares will make their way on the Indian bourses.
Financials: The company is a profitable concern with no long term debt. For the Fy21, the firm's consolidated profit came in at Rs. 1.7 billion, 31% higher than the previous year's figure of Rs. 1.3 billion.
Valuations and Brokerage's view:
At a higher price band of Rs. 216, CMS is demanding a P/E multiple of 19x (to its FY21 earning of Rs. 11.4), which is in-line to the multiple of the sole listed peer. "Considering the continued vital role of the cash in the domestic economy and the company's diversified product portfolio across the cash management value chain coupled with its dominant market position in the sector, we assign a "SUBSCRIBE" rating for the issue", says Choice Broking.
Experts suggest that given the strong fundamentals of the company and key leadership position, one can bet on the issue for the medium term.
Ankur Saraswat, Research Analyst at Trustline Securities is quoted as saying in a leading daily "CMS Infosystems is coming with an IPO which is basically an offer for sale of ₹1100 Cr. It is a leading market player in the ATM management space. The company has a strong pan-India network, long standing customer relationship with increased business opportunities. It is equipped with an integrated business platform offering a range of products and services. However, pledging of an entire promoter stake, lack of experience of promoters, entire dependence on the banking sector, limited customers and operating in highly regulated and controlled environment with intense competition are few serious concerns."
So, all in all while the valuations and the business model are attractive, the issue also poses some risk which also need to be factored in before betting on the issue for both listing and long term.