AGS Transact fails to impress on listing day; what should investors do?

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Shares of AGS Transact Technologies listed bang at their issue price of Rs 175 on the National Stock Exchange on January 31, as the year’s first initial public offering suffered from weak market sentiment towards IPO stocks.

The payments solutions provider and ATM management company saw its IPO subscribed 7.8 times, largely driven by high net-worth individuals and retail investors.

The unflattering listing saw analysts recommend investors to book profits on any gains post listing.

“The investors who got the allotment are advised to book the profit and look for other investment opportunities,” said Santosh Meena, head of research at Swastika Investmart.

Meena said the government’s focus on digital payments will reduce the use and availability of cash and impact the company’s ATM management business.

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AGS Transact Technologies provides digital and cash-based solutions to banks and corporate clients. It offers customised products and services comprising ATM and CRM outsourcing, cash management and digital payment solutions including merchant solutions, transaction processing services, and mobile wallets.

The company’s IPO was wholly an offer-for-sale with the promoter Ravi Goyal selling shares worth Rs 650 crore. However, the company will indirectly receive those funds as Goyal has subscribed to compulsorily-convertible preference shares of the company.

“Entire dependence on one sector, limited customers, and operating in a highly regulated and controlled environment with intense competition from peers as well as next-gen payment solutions providers are the big concerns,” said Ankur Saraswat, research analyst at Trustline Securities.

Gaurav Garg of CapitalVia Global Research recommended clients avoid the stock for the long term. “Investors who have already subscribed to this issue can consider booking profit around 15 to 20 percent,” he said.

At 11.45 am, shares of AGS Transact were trading 3.5 percent lower at Rs 168.80 on the NSE.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.