It expects a restoration within the fee resolution enterprise, led by the revival in ATM transactions, rising money circulation, greater demand for CRM machines, desire for RBI & MHA compliant distributors and development within the digital fee 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 fastened worth ATMs of PSU lenders, AGS’ ATM administration income (transaction and stuck worth) was down as much as 10% within the final two fiscals.
Nonetheless, enchancment in ATM transactions can lead the money administration enterprise to ship 13% CAGR over FY22-25E and EBITDA margin may broaden to 15-18% with scale, the brokerage stated.
AGS has a complete of two.4 lakh POS machines, with a 4% market share. Out of the full order ebook of 80,000 POS machines, about 50,000 are put in and the remaining can be achieved over the subsequent 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 stated.
AGS lowered its debt to Rs 700 crore in FY22 via 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 improve in debt ranges.”
AGS Transact Applied sciences had raised Rs 680 crore via its preliminary stake sale, by promoting shares for Rs 175 apiece. Nonetheless, the inventory on Tuesday, traded round Rs 80, wiping out over half of buyers’ wealth.
AGS is pivoting itself to a worthwhile development terrain in FY23E, supported by margin enlargement within the ATM/money administration and discount in debt, resulting in curiosity financial savings, stated
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 worth of Rs 123 on the inventory which indicators a 54% upside within the counter.
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