Radiant Cash Management Services IPO Opens On Friday, Should You Subscribe?

Radiant Cash Management Services Pvt. Ltd.'s Rs 371-388 crore initial public offering (IPO) opened on Friday, December 23, 2022. It will be available from December 23 to 27, 2022 for the subscription. It is priced between Rs 94 and Rs 99 per share. It is Rs 60 crore fresh issue. The offer for sale is for 33,125,000 Equity shares.

Bidding Details

• QIBs (Including Anchor) - 50% of the offer (Approx 19,592,802 Eq Shares)
• Non-Institutional - 15% of the offer ( Approx 5877841 Eq Shares)
• Retail - 35 % of the offer ( Approx 13,714,963 Eq Shares)

Leading brokerage firm Hem Securities has released a report on the IPO highlighting what they like and the valuation with whether you should subscribe to the IPO or not. Here are the key highlights of the report.

Leading integrated cash logistics player in a consolidating industry present across the value chain of retail cash management

Company is an integrated cash logistics player with leading presence in RCM segment and are one of the largest players in the RCM segment in terms of network locations or touch points served as of March 31, 2022. The Indian cash management services market revenue grew at a CAGR of more than 10% during the period between Fiscal 2010 and Fiscal 2021, growing from approximately ₹ 10.0 billion to ₹ 27.7 billion during this period. The RCM market is estimated at ₹ 6.8 billion in Fiscal 2021 and is projected to reach a market size of ₹ 20.4 Billion by Fiscal 2027, growing at a CAGR of 20.3%. The growth in the organized retail sector as well as the corresponding outsourcing potential is expected to be prime factors for the development of the RCM market in India.

Pan India presence with strong network in Tier 2 and Tier 3+ locations and fast growing end user segments

Of company's touchpoints as of July 31, 2022, 55,513 or 86.06% are located in tier 2 and tier 3+ towns and cities. Company's revenue from operation from these markets in the three months ended June 30, 2022 and in Fiscal 2022, Fiscal 2021 and Fiscal 2020, was ₹ 719.54 million, ₹ 2,493.65 million, ₹ 1,913.92 million and ₹ 2,186.09 million, respectively. Company's touch points in tier 2 and tier 3+ locations has increased proportionately from 40,588 on March 31, 2020 to 47,773 as on July 31, 2022. In the three month period ended June 30, 2022 and each of Fiscal 2022, Fiscal 2021 and Fiscal 2020, company earned 85.61%, 87.19%, 86.34% and 88.05% of its revenues from tier 2 and tier 3+ towns and cities.

Diversified client base with long standing relationship and ability to cross-sell value added services

Company have a marquee client base covering some of India's largest foreign, private sector and public sector banks (including India's largest public sector bank). Amongst its key clients are Axis Bank Limited, Citibank, Deutsche Bank Limited, HDFC Bank Limited, ICICI Bank Limited, Kotak Mahindra Bank, Standard Chartered Bank, State Bank of India, The Hongkong and Shanghai Banking Corporation Limited and Yes Bank Limited.

Valuation

Company is bringing the issue at price band of Rs 94-99 per share at p/e multiple of 17x on FY22 basis. Company is leading integrated cash logistics player in a consolidating industry present across the value chain of retail cash management with pan India presence with strong network in Tier 2 and Tier 3+ locations and fast growing end user segments. Company's diversified client base with long standing relationship and ability to cross-sell value added services has robust operational risk management with significantly built up technology to optimise operational profitability has steady financial growth & experienced management team and backed by a reputed institutional investor. "Hence, looking after all above, we recommend "Subscribe" on issue for long term," the brokerage said.

About - Radiant Cash Management Services Pvt. Ltd.

Radiant Cash Management Services is an integrated cash logistics player with leading presence in retail cash management ("RCM") segment of the cash management services industry in India and is one of the largest players in the RCM segment in terms of network locations or touch points served as of March 31, 2022. Company provide services across 13,044 pin codes in India covering all districts (other than Lakshadweep) with about 55,513 touch points serving more than 5,388 locations as of July 31, 2022.

 

Disclaimer

The IPO has been picked from the brokerage report of Hem Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.