AGS Transact Technologies IPO opens today: should you subscribe?

Through an initial public offering that begins on Wednesday, AGS Transact Technologies would be the leading domestic firm to gain a listing on the share markets this year. The IPO comes after a month of stagnation in the main market.

Dates of Initial Public Offerings

The subscription period for the public issue begins on January 19 and ends on January 21. On January 18, the book of anchor investors, if there is one, will open for a day.

Price Band

The offer’s price range has been set at Rs 166 to Rs 175 per share.

Specifics of the Offer

The business expects to raise Rs 680 crore via the public offering. This is purely a shareholder offer for sale, with founder Ravi B. Goyal selling shares for Rs 677.58 crore.

The remaining Rs 2.42 crore worth of shares will be sold by Shailesh Shetty, VC Gupte, Nikhil Patiyat, Rakesh Kumar, and Rajesh Harshedrai Shah, among others.

Objectives

The firm will not profit from the public offering since all of the proceeds will go to the selling shareholders.

Investors’ Reserved Portion and Lot Size

Investors may place bids for a minimum of 85 equity shares and then in multiples of 85 shares. As a consequence, individual investors may invest a minimum of Rs 14,875 in each lot and a maximum of Rs 1,93,375 for 13 lots in the IPO, as they are authorized to contribute up to Rs 2 lakh.

Qualified institutional purchasers will get half of the offering, retail investors will receive 35%, and non-institutional investors would receive 15%.

Description of the Business

AGS Transact offers a variety of specialized goods and services, including automated teller machines (ATMs) and cash recycling machines, as well as outsourcing, cash management, and digital payment solutions, such as merchant solutions, transaction processing services, and mobile wallets.

It has installed 221,066 payment terminals as of August 31, 2021, making it one of India’s leading deployers of point-of-sale terminals at fuel shops. It has around 50 banking clients as of August 31, 2021.

Financials

In the financial year 2021, AGS Transact made a lesser profit of Rs 54.79 crore, compared to Rs 83.01 crore the previous year. In the same quarter, revenue fell slightly to Rs 1,758.94 crore from Rs 1,800.44 crore.

It recorded a loss of Rs 18.1 crore on sales of Rs 753.4 crore for the five months ending August 31, 2021. The pandemic-related lockdowns harmed the company’s overall profitability.

Managers and promoters

The proprietors of the firm, Vineha Enterprises and Ravi B Goyal, own 97.45% of the stock. Vineha Enterprises is owned entirely by Ravi B Goyal and his spouse. The company’s chairman and managing director is Ravi B Goyal. Anupama R Goyal serves on the board as a non-independent and non-executive director.

Concerns and Risks

Before subscribing to the issue, investors should examine the following risks and concerns:

• Pandemic has had, and may continue to have, a negative impact on the company’s operations.

• A small number of customers account for a significant portion of the company’s income.

• A decline in the usage of cash as a method of payment might have a negative impact on the company’s operations.

• If it engages in fee-based activities, its financial performance may be harmed if it is unable to obtain revenue from such activities.

• The Reserve Bank of India and other regulatory bodies extensively regulate the company’s business areas.

Premiums in the grey market, allotment, refunds, and listing dates

According to sources, AGS Transact Technologies shares were available on the grey market at a premium of Rs 20-21, or a price of Rs 195-196 per share over the upper price range of Rs 175 per share.

After the public offering closes on January 21, the business will complete the IPO share allocation by January 27 and begin reimbursements to failed investors by January 28. By January 31, equity shares will be credited to qualifying investors’ demat accounts. The BSE and the National Stock Exchange will begin trading in equity shares on February 1st. The issue’s book running lead managers are HDFC Bank, JM Financial and ICICI Securities.

Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.