AGS Transact Technologies Limited is one of the largest integrated omni-channel payment solutions provider in India in terms of providing digital and cash-based solutions to banks and corporate clients, as of March 31, 2021. They provide customised products and services comprising ATM and CRM outsourcing, cash management and digital payment solutions including merchant solutions, transaction processing services and mobile wallets. As of March 31, 2021, they were the second largest company in India in terms of (i) revenue from ATM managed services under the outsourcing model, and (ii) revenue from cash management and number of ATMs replenished. As of August 31, 2021, they deployed 2,21,066 payment terminals and were one of the largest deployers of POS terminals at petroleum outlets in India, having rolled out IPS at more than 16,000 petroleum outlets with 28,986 terminals in India, as of March 31, 2021. Company operates the business in the following segments:1. Payment Solutions2. Banking Automation Solutions and3. Other Automation Solutions (for customers in the retail, petroleum and colour sectors). Payment Solutions segment comprises ATM and CRM outsourcing and managed services, cash management services, iCDs, digital payment services which include toll and transit solutions, Fast-lane, transaction switching services, services through POS machines and agency banking. Company's customers in the Payment Solutions segment include ICICI Bank Limited, Axis Bank Limited, HDFC Bank Limited and Federal Bank Limited. The Banking Automation Solutions business segment, which commenced in 2004, comprises sale of ATMs and CRMs, currency technology products and self-service terminals and related services and upgrades. As of August 31, 2021, they had approximately 50 banking customers, including ICICI Bank Limited, HDFC Bank Limited and Axis Bank Limited. The Other Automation Solutions business segment encompasses the sale of machines and related services to customers in the retail, petroleum and colour segments. As part of the Other Automation Solutions segment, they supply automation products and provide implementation services, system integration, remote management and support and help desk services. Customers for the retail sector offerings include More Retail Private Limited, while customers for the petroleum sector offerings include HPCL, IOCL and BPCL. The colour operations primarily comprise the supply of automatic paint dispensers and related services, and serve customers including Asian Paints Limited, Kansai Nerolac Paints Limited and Berger Paints India Limited. As per financial performance, AGS Transact Technology Limited has posted total income/net profits of Rs 1,823.63 Cr / Rs 66.19 Cr (FY19), Rs 1,833.53 Cr / Rs 83.01 Cr (FY20), Rs 1,797.15 Cr / Rs 54.79 Cr (FY21) and Rs 762.30 Cr / Rs (18.11) Cr (5M FY22). So company has posted almost static results over last couple of years and posted losses in 5M FY22. They have posted an average EPS of Rs 5.57 and average RoNW of 13.36% for last 3 fiscals. Issue is priced at a P/BV of 3.82 as per NAV of Rs 45.85 on 31.08.21. Also has high debt. If we attribute latest earnings of FY21 on fully diluted equity post issue, then asking price is at a P/E of around 38.45, which looks fully priced. As per RHP, there are no listed peers, but we may consider latest listed player CMS Info Systems Limited for comparison, which is trading at P/E of 26. On BRLM's front, three lead managers are associated with this IPO, and have handled around 61 IPOs in last three fiscals. From last 10 IPOs, two is opened below issue price and remaining are opened above issue on the day of listing. As of now, two are trading below issue price and other are trading above issue price. ( As on 17.01.22) As per financials, AGS Transact Technologies Limited has shown static results, RoNW 13.36% and P/E is around 38 as per FY21 earnings. Company has posted losses in 5M FY22 result. Also company has high debt. Some of the segments, in which company operates has very bright prospects. Performance of BRLM is average. So we give AVOID rating to this IPO.
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