Deep Dive of AGS Transact Technologies IPO

AGS Transact Technologies is an omnichannel payment solution provider offering ATM services, point-of-sale terminal (POS), banking automation solutions etc. It is coming up with the first IPO of 2022. Everybody is waiting for its listing, which will tread the path for other IPOs this year.
Deep Dive of AGS Transact Technologies IPO

About The Company

AGS Transact provides end-to-end cash and digital payment solutions. It serves in India and other Asian countries. As of August 31, 2021, it had installed a network of 2,21,066 merchant POS, 17,924 petroleum outlets and 72,000 ATMs. The company has about 50 clients, including ICICI Bank, HDFC Bank and Axis Bank. Plus, it has a long-standing relationship with global technology partners like ACI, Diebold Nixdorf etc.

The market is excited for the IPO season this year, and that’s why everybody’s waiting for a good start by AGS. The grey market premium on Thursday was Rs 190, a Rs 15 premium on the upper limit of the price band. The listing of the IPO might be on February 1 (the day of Union Budget).

The promoters of the company are Ravi Goyal and his wife Anupama Goyal. He is responsible for the overall management of the company. He holds a Bachelor of Engineering degree and has previously worked at DCM Limited and Byte Systems. His educational background supports the company’s operations and makes him fit for this role. Both promoters shareholding is 98.23% which will become 66.07% post issue.

What Are The Concerns?

A major concern is that the top line in the last three fiscals has been static. The company reported losses for the 5M of FY22. Additionally, the company has a small number of clients that account for a large amount of its revenue. If any of these clients leave, then the company’s revenue will decline. Also, the RBI and other authorities heavily regulate this sector. A small slip can cost the company hugely. At last, cash as a mode of payment is losing its shine. Digital transactions are preferred more these days. UPI and other digital apps stand as a threat to the business.

What Lies Ahead?

AGS Transact has three major business segments – payment solutions, banking automation and other automated solutions for retail players. It has pioneered these segments and looks confident to run its business in the future. There is a bright future for the company, but the financial performance needs to be improved for the long-term investors to dive in. The IPO’s listing could get bumpy as the Union Budget will also be announced on February 1.  

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