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The initial public offering (IPO) of AGS Transact Technologies has opened for public subscription today. The price band of the three day initial share-sale has been fixed at 166-175 a share, which will conclude on Friday, January 21. The payment solutions provider raised 204 crore from anchor investors ahead of its issue.

As of 1:40 pm on day 1 of the offer, the issue has been subscribed 0.73 times with retail investors' category fully booked 1.04x and NIIs bid 0.99 times, BSE data showed. 

The IPO, which is the first in the new year 2022, is purely an offer-for-sale (OFS) of equity shares worth 680 crore by a promoter and other selling shareholders. 

As per market observers, AGS Transact Tech shares are commanding a premium (GMP) of 10 in the grey market today. The company's shares are expected to list on stock exchanges BSE and NSE on February 1, 2022.

Assigning Subscribe rating to the IPO, brokerage house Emkay said that, “We believe AGS provides an opportunity to invest in a cash-cum-digital play from a long-term perspective. At the higher price band of Rs175, the stock is valued similar to its peers like CMS Info Systems."

Though, the brokerage sees Loss of ATM business mandate with large bank, Covid-led business disruption and delay in the scale-up of digital payment business as key risks.

There are no comparable peers, which have similar business operations to that of AGS. CMS Info Systems Ltd. and SIS Ltd. are close peers and thus are referenced for benchmarking the valuation. 

“AGS’s business operations were severely impacted from the Covid-19 pandemic restriction, thus its earnings was depressed in FY21. With ease in pandemic restriction, anticipating a ramp-up in ATM deployments by banks and further evolution in the digital payment space, we feel the company is well placed to benefit from its diversified product & services portfolio and multiple revenue streams. Thus we assign a ‘Subscribe for Long Term’ rating," said analysts at Choice Broking in a note. 

AGS Transact Tech is an integrated omni-channel payment solutions provider in India in terms of providing digital and cash-based solutions to banks and corporates.

"AGS is the only company in India to provide full range of services in ATM managed services market. That being said we believe the company is facing challenges like slowdown in the core ATM market due to shift towards digital payments, Margins (PAT) and ROE have been on the decline since FY19, high debt on the balance sheet, due to which we are not so bullish on the company and would advice investors to skip," said Divam Sharma, Co-founder of Green Portfolio.

 

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