AGS Transact Technologies IPO sees 1.68 times subscription, QIB portion booked 49% on final day

AGS Transact Technologies IPO

The maiden public offer of AGS Transact Technologies, one of the largest integrated omnichannel payment solutions providers in India, is subscribed 1.68 times as it received bids for 4.82 crore equity shares against offer size of 2.86 crore equity shares on January 21, the final day of bidding.

Retail investors and non-institutional investors remained at the forefront as their reserved portion were subscribed 2.46 times and 1.47 times.

Qualified institutional buyers have put in bids for 49 percent shares of the portion set aside for them.

AGS Transact Technologies, which provides digital and cash-based solutions to banks and corporate clients, is planning to mop up Rs 680 crore through its public issue that is entirely an offer for sale by selling shareholders. Of which the company already garnered Rs 204 crore through anchor book on January 18. The issue was opened on January 19.

The company provides 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 majority of the revenues of AGS Transact are contributed by banking automation solutions.

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The price band for the offer has been fixed at Rs 166-175 per share. "The company is available at the upper end of the IPO price band, at 38.5x its FY21 earnings. The issue is priced at a price-to-book value of 3.7 based on its NAV of Rs 47.1, with a market cap of Rs 2,106.9 crore, which we believe is quite reasonable," says Anand Rathi.

The brokerage further says the diversified product portfolio, customer base and revenue streams leading to cross-selling opportunities for the company. However, "the company's business is dependent on their banking partners. The company also has threats from new fintech companies undertaken by newage digital Payment system viz micro-ATM, Aadhaar Enabled Payment System (AePS), UPI etc."

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While evaluating on the financial front at the upper end of the IPO price band the valuation seems to be reasonable, factoring all the above scenarios, Anand Rathi assigned 'subscribe long term' rating to this IPO.