Omni channel payment solutions provider AGS Transact Technologies is set to make its debut on the bourses a day earlier on January 31. The company preponed its listing date from February 1 as the Union Budget, the biggest event of the year, is scheduled for that day. This would be the first listing of 2022.
Experts largely expect muted listing as lack of consistency in financials, weak market sentiment, offer for sale issue, and intense competition from peers are likely to weigh on its listing price.
AGS Transact has raised Rs 680 crore through its public issue, which was entirely an offer for sale by existing selling shareholders, at a price of Rs 175 per share, the upper price band.
Click Here To Read All IPO Related News
The maiden public offer was subscribed 7.79 times during January 19-21 amid good participation by all kind of investors. Non-institutional investors had put in bids 25.61 times their reserved portion, while qualified institutional investors and retail investors' portion were booked 2.68 times and 3.08 times respectively.
"Market sentiments have turned negative, and this could impact the listing," says Jay Prakash Gupta, Founder of Dhan.
Moreover, "it's an offer for sale and proceeds of the IPO will go to the promoters. The company had positive free cash flow free cash flow and still the debt in the book remains, that is worrisome," he adds.
In the last one quarter, the market has been highly volatile and recently it corrected more than 6 percent from its recent high of 18,300 on the Nifty50 amid faster Fed tightening expectations, inflation pressure, rising oil prices and caution ahead of Union Budget.
Prashant Tapse, Vice President (Research) at Mehta Equities also expects muted or discount listing show in the volatile markets. "We believe the reason for low demand would be investors' concern over 100 percent OFS followed by weak sentiment in the recently listed IPOs like PayTM, Policybazaar, Shriram Properties and Rategain which failed to perform on the listing day," he says.
Tapse also sees a few more concerning points like losses on books incurred in the last five months of FY22 and a flat growth in topline which is not giving enough room for any listing gains. "Based on financial parameters, the issue was fully priced living nothing on table to new investors."
Also read - Adani Wilmar IPO – Should you subscribe?
AGS Transact posted a loss of Rs 18.1 crore on revenue of Rs 753.4 crore for five months period ended on August 31, 2021. Its profit in the year FY21 at Rs 54.79 crore has fallen from Rs 83.01 crore profit recorded in previous year, and revenue during the same period also declined to Rs 1,758.94 crore compared to Rs 1,800.44 crore.
The company is one of the leading market players in the ATM management space, having strong pan-India network, and long standing customers relationship. It has an integrated business platform that offers a diversified product portfolio and strong in-house infrastructure and technological capabilities.
However, "entire dependence on one sector, limited customers, and operating in highly regulated and controlled environment with intense competition from peers as well as next-gen payment solutions providers are the big concerns," says Ankur Saraswat, research analyst at Trustline Securities.
So, it is displaying miniscule gains of Rs 5 per share and listing could be around Rs 180 per share, he adds.
The grey market also seems to be indicating the same trend with respect listing. AGS Transact traded at a moderate premium of Rs 5 over issue price of Rs 175 as per IPO Watch, while as per IPO Central, it was available at a discount of Rs 10 to offer price.Disclaimer: The views and investment tips expressed by investment 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.