The three-day initial share sale of payment solutions provider AGS Transact Technologies on Friday will open on January 19, and conclude on January 21. It has fixed a price band of Rs 166-175 a share.
The company has cut the size of its public issue to Rs 680 crore, from Rs 800 crore planned earlier.
The public issue is purely an offer-for-sale (OFS) of equity shares by a promoter and other selling shareholders.
AGS Transact Technologies Ltd. raised Rs. 204 crore from anchor investors by alloting 1,16,57,141 equity shares at Rs. 175 (upper end of price band) per equity shares.
Brokerages have come out with mixed reviews on AGS Transact Technologies IPO. Three brokerages have given their verdict as Subscribe for long-term, one has said to subscribe with caution.
Should you subscribe?
Emkay Research says, the IPO fairly is priced in line with peers; and hence says, ‘Subscribe’ for long-term play. "We believe AGS provides an opportunity to invest in a cash-cum-digital play from a long-term perspective. The IPO size has been toned down to Rs6.8bn. At the higher price band of Rs175, the stock is valued at 3.7x FY21/3.8x annualized FY22E BV, similar to its peers - CMS Info Systems (recently listed) is trading at 4.4x FY21/3.7x annualized FY22E BV (done well post listing), and SIS with multiple business lines is trading at 3.7x FY21 PBV."
ProfitMart recommends, Apply with long-term investment view. "AGS Transact Technologies is an integrated omni-channel payment and cash solutions provider. It has diversified product portfolio, customer base, and revenue stream. The Company has strong capabilities to develop customized inhouse solutions. It has long-standing relationship with global technology providers like Diebold Nixdorf, ACI. AGS Transact Technologies has strong in-house infrastructure and technological capabilities. In view of all these competitive strengths; investors may consider applying to this IPO with a long term investment view."
Choice Broking suggests, Subscribe for long-term. "There are no comparable peers, which have similar business operations to that of AGS. CMS Info Systems Ltd. and SIS Ltd. are close peers and thus are referenced for benchmarking the valuation. At higher price band of Rs. 175, AGS is demanding a P/E multiple of 38.5x (to its FY21 earning of Rs. 4.6), which is at premium to peer average of 21.8x.
"AGS’s business operations were severely impacted from the Covid-19 pandemic restriction, thus its earnings was depressed in FY21. With ease in pandemic restriction, anticipating a ramp-up in ATM deployments by banks and further evolution in the digital payment space, we feel the company is well placed to benefit from its diversified product & services portfolio, varied customer base and multiple revenue streams. Thus we assign a “Subscribe for Long Term” rating for the issue."
Marwadi Financial Services recommends Subscribe (with caution). "The company derives a significant portion of revenues from a limited number of customers. Top 10 customers contribute 61 percent and 63 percent of the revenues for the five months ended August 31, 2021 and Fiscal 2021 respectively. A decrease in the use of cash as a mode of payment can affect the business significantly. The business of supply, installation and maintenance of ATMs is highly regulated by RBI."
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