ags inventory value: HDFC Sec bullish on this debutant however goal suggests it might not reclaim IPO value
It expects a restoration within the cost answer enterprise, led by the revival in ATM transactions, growing money circulation, increased demand for CRM machines, choice for RBI & MHA compliant distributors and development within the digital cost enterprise.
AGS Transact Applied sciences (AGS) is the second-largest ATM outsourcing and money administration participant in India. It sustained the influence of COVID-19, supported by its robust relationship with prime Indian banks.
On the again of COVID-led restrictions and a fall in mounted value ATMs of PSU lenders, AGS’ ATM administration income (transaction and glued value) was down as much as 10% within the final two fiscals.
Nevertheless, enchancment in ATM transactions can lead the money administration enterprise to ship 13% CAGR over FY22-25E and EBITDA margin might increase to 15-18% with scale, the brokerage mentioned.
AGS has a complete of two.4 lakh POS machines, with a 4% market share. Out of the whole order e-book of 80,000 POS machines, about 50,000 are put in and the remaining will probably be carried out over the following two years.
“The expansion was pushed by tie-ups with main OMCs for POS set up at petrol pumps throughout India. The income from digital funds is anticipated to extend at a CAGR of 16% over FY22-25E, led by OMC POS,” the brokerage mentioned.
AGS diminished its debt to Rs 700 crore in FY22 by pre-payment of Rs 550 crore NCDs issued in FY21. The discount within the curiosity payout will present a lift to profitability in FY23E. “We don’t count on any additional enhance in debt ranges.”
AGS Transact Applied sciences had raised Rs 680 crore by its preliminary stake sale, by promoting shares for Rs 175 apiece. Nevertheless, the inventory on Tuesday, traded round Rs 80, wiping out over half of traders’ wealth.
AGS is pivoting itself to a worthwhile development terrain in FY23E, supported by margin growth within the ATM/money administration and discount in debt, resulting in curiosity financial savings, mentioned
Securities in its report.
“We count on AGS to ship over 10 and 15% income and PAT CAGR over FY22-25E, respectively, with an RoE of 17%,” it added with a purchase ranking and a goal value of Rs 123 on the inventory which alerts a 54% upside within the counter.
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