AGS Transact Technologies Ltd Archives

Here are some of the major updates that could move the markets on Monday:

IndiGo surpasses milestone of 2,000 daily scheduled flights

IndiGo achieved a significant milestone by surpassing 2,000 planned flights per day, making it the first airline in India to do so. This marks a substantial increase in operational capacity. According to the latest data for October 2023, IndiGo is among the top 10 airlines globally in both frequency and seat capacity.

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Adani Power promoter entities buy 2% stake via open market

Two promoter group entities in Adani Power have acquired a 2% additional stake in the company in a since September through the open market. Ardour Investment Holding and Emerging Market Investment DMCC acquired 7.92 crore shares or 2.06% stake in Adani Power between September 26 and November 16. Following the acquisition, the cumulative shareholding of promoters increased to 71.14%.

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RBI’s move will not impact bank’s ability to grow: SBI Chairman

According to the Chairman of The State Bank of India, Dinesh Kumar Khara, the Reserve Bank of India’s move on consumer loans would not affect the lender’s ability to grow. The impact of the increased risk weight on personal loans (including credit cards) will be 55-60 basis points (bps). SBI’s capital adequacy ratio stood at 14.28% as of September end.

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Lupin receives USFDA nod for Ganirelix Acetate injection

Lupin Ltd received approval from the United States Food and Drug Administration (USFDA) for Ganirelix Acetate injection. The drug is used to treat ovarian hyperstimulation. The pharma major will manufacture the injection at its facility in Nagpur, Maharashtra. As per IQVIA MAT data for September 2023, Ganirelix Acetate Injection had estimated annual sales worth $84 million in the United States.

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AGS Transact Technologies wins ₹1,100 crore order from SBI for 2,500 ATMs

AGS Transact Technologies Ltd has secured an order worth ₹1,100 crore from State Bank of India (SBI) to deploy 2,500 ATMs over seven years. The company will deploy these ATMs on a transaction fee basis as a part of the Total Outsourcing Model. It will start the deployment of the new ATMs in the next calendar year.

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JSW Infra secures ₹4,119 crore all-weather port project in Karnataka

JSW Infrastructure has received a letter of award (LoA) from the Karnataka Maritime Board to construct an all-weather port project in Karnataka. The estimated cost of the project is ₹4,119 crore, with an initial capacity of 30 million tonnes per annum (MTPA). The proposed Keni Port would have modern environment-friendly mechanised facilities for handling cape-size vessels.

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Delhi HC stays proceedings in money laundering case against Hero Motocorp’s Pawan Munjal

The Delhi High Court stayed the proceedings against Hero Motocorp chairman Pawan Kant Munjal in a money laundering case being probed by the Enforcement Directorate (ED). Justice Saurabh Banerjee issued notice to the investigating agency on Munjal’s petition against the ED case and granted it time to file its reply.

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Hindustan Zinc needs govt nod to create separate biz entities

The Ministry of Mines has written to Hindustan Zinc Ltd (HZL), stressing that any business reorganisation would require formal approval from the government. HZL’s board is exploring a corporate restructuring plan to create three separate legal entities for zinc & lead, silver, and recycling businesses to unlock shareholder value. The government has a 29.54% stake in HZL, which is 64.92% owned by Vedanta Ltd.

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India seeks to restart stalled Adani coal imports probe

Indian investigators have sought the Supreme Court’s permission to restart a probe into Adani Group’s alleged coal import overvaluation. The Directorate of Revenue Intelligence aims to collect evidence from Singapore, accusing Adani of thwarting efforts. Adani denies wrongdoing, facing wider scrutiny since Hindenburg Research’s accusations. Legal battles span Mumbai, New Delhi, and Singapore.

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SBI to launch ‘Yono Global’ app in Singapore and US

State Bank of India (SBI) will soon launch its banking mobile app ‘Yono Global’ in Singapore and the US, offering digitised remittance and other services to its customers. Currently, SBI offers Yono Global services in 9 countries, starting with UK operations in September 2019. SBI’s foreign operations have a total balance sheet size of $78 billion.

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AGS Transact Technologies Ltd’s three-day IPO has gone live today! The IPO closes on January 21, 2022. In this article, learn more about the company’s business model and its IPO.

The Business Model

According to the company’s Red Herring Prospectus (RHP), AGS Transact offers the following services:

Payment Solutions – Includes ATM and Customer Relationship Management (CRM) outsourcing and managed services, cash management services, transaction switching services, POS machine services, and agency banking. As of August 31, 2021, the company offers 14,099 ATMs and CRMs under its outsourcing business and 19,161 ATMs and CRMs in India. It also provides outsourcing solutions for 1,273 ATMs and kiosks in Sri Lanka.

Banking Automation Solutions – It sells ATMs and CRMs, currency technology products, self-service terminals, and related services and upgrades. As of August 31, 2021, it had had approximately 50 banking customers, including ICICI Bank Ltd, HDFC Bank Ltd, and Axis Bank Ltd.

Other Automation Solutions – Includes sale of machines and related services to customers in the retail, petroleum, and colour segments like system automation products, system integration, remote management, and other service offerings.

The company also has certain businesses overseas in Sri Lanka, Singapore, Cambodia, the Philippines, and Indonesia. The overseas business contributes to nearly ~4% of the company’s total revenue.

As of August 31, 2021, AGS Transact had installed a network of 221,066 merchant POS, 17,924 petroleum outlets. It had installed nearly 72,000 ATMs and CRMs offering cash management services, 46,800 cash billing terminals, and 88,521 colour dispensing machines. The business serves customers in 2200 cities and towns through 446,000 machines or customer touchpoints.

To sum it up, AGS manufactures ATMs and other machines that exist in the retail banking business. AGS also manages and replenishes the cash in it and maintains these machines. It also provides automation solutions for payments at retail outlets, petrol stations, etc.

Financial Performance

AGS Transact Tech’s cash flows and financial condition has been affected by the Covid-19 pandemic. The company’s revenue fell 2% YoY to Rs 1,797.15 crore for the financial year 2020-21 (FY21). Its net profit fell 33.7% YoY to Rs 54.79 crore during the same period. Its Return on Net Worth (RoNW) stood at 10.29% in FY21, which is quite low compared to its peers CMS Info Systems Ltd, Radiant Cash Management Services Ltd. In the first five months ended August 2021, AGS Transact stood at a loss of Rs 18.10 crore.

The company’s outstanding gross debt stood at Rs 1,654.4 crore as of August 31, 2021.

IPO Details in a Nutshell

How the company will utilise its proceeds is tricky. Mr. Ravi B. Goyal, the founder, chairman, and promoter, will offload his shares for nearly Rs 650 crore. He will use this money to buy Compulsory Convertible Preference Shares (CCPS) of Vineha Enterprises Private Ltd (VEPL) from his own company AGS Transact. VEPL owns a 44% stake in AGS Transact and is also a promoter. In the end, AGS Transact gets Rs 650 crore which it will use to redeem/buy back its Non-Convertible Debentures (NCDs) or bonds that it had issued. Essentially, AGS Transact gets the money that it will use to offset the debt.

The Way Ahead

AGS Transact Technologies has had a lukewarm reaction before its debut. In the grey market, the company is trading at Rs 15-17 more than its issue price. The company has stable financials and a sustainable outlook in terms of business. Its business is impacted by the flow of cash. With digital payments blocking the way for cash, the company’s business could get impacted. As of August 31, 2021, the company had trade payables of Rs 392 crore and pending statutory dues worth Rs 155 crore. The company receives most of its business from a small set of customers. It earns ~64% of its revenue from the top ten customers. Moreover, any changes in the banking sector could affect its business.

The way AGS Transact Technologies is raising funds through the IPO is something that is seldom seen in the market. It does indicate that the management means business and knows its way around through trick and trade. It is advised that investors research thoroughly before investing in any IPO.

What are your views on this IPO? Will you be applying for it? Let us know in the comments section of the marketfeed app.