The Crow Verdict: You might think AGS Transact is another cash management company but it is not merely one. It is the only company that provides A-Z ATM and cash management. This means logistics, building those ATMs, handling cash, interacting with banks and payments providers. Add to that the POS business, albeit a small part, but which makes it not entirely a business that is involved in cash. I like to see it more of a competitor to if Pine Labs married CMS or SIS Prosegur. Since Pine is looking to list overseas, it then makes sense to compare AGS with CMS and SIS Prosegur. (I was critical of CMS and had not applied.)
The comparison doesn't look good when you consider valuations and financials. For one, AGS is neck deep in reputation mismanagement and debt. Part of this 680 cr OFS is supposed to clean up that image and pay for outstanding NCDs. And I am not even considering the recently recorded losses. Also, CMS and SIS are trading at P/E of 27 and 18 respectively. AGS is demanding 38. There goes the listing pop if you are thinking about it.
But that does not mean it may not do well on the bourses. Although in the cash business, AGS is big enough to survive in the short-to-midterm. It has favourable prospects from the industry, thanks to its global partnership with Diebold and some (4%) exposure to other Asian countries.
All of this makes me on the fence with this issue. That is where GMP and subscription may help. As it looks, this issue does not look attractive to me. But if the GMP shoots beyond 50 and QIB goes beyond 30x anytime in the next 2 days, I will apply with full force i.e. 3 retail applications.
Red flags - 6 out of 11. Keep crowing!
Always in restraint of Mrs. Crow.
Zerodha (Trading Account)
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