Radiant Cash Management IPO: Key things to know as issue opens today. Should you subscribe or skip?

The three-day long initial public offer (IPO) of Radiant Cash Management Services has opened for public subscription from Friday December 23, till Tuesday, December 27, 2022. The company has fixed a price band of ₹94 to ₹99 a share for its ₹388-crore initial share sale. As of 1:55 pm on day 1, the issue has been subscribed 0.02x with retail category booked 0.04x, BSE data showed.

Radiant Cash Management IPO comprises fresh issue of shares worth up to ₹60 crore and an offer for sale (OFS) of 33,125,000 shares by promoter David Devasahayam and private equity firm Ascent Capital Advisors India.

“The Retail Cash Management (RCM) market will be bolstered by the growth in organized retail sector and the corresponding outsourcing potential. Radiant also has ability to cross sell value-added services such as network currency management and cash processing services. Based on FY22 earnings the company is valued at 27.8x P/E, 17.2x EV/EBITDA and 3.5x EV/Sales," said Reliance Securities.

In view of the leading integrated cash logistics player, strong financial track record with healthy double digit operating margins (EBITDA margin of >20%) and double digit return ratio (RoE of 27.3%), strong presence across India, multiple key marquee clients, focus on continuous technology improvement and attractive valuation, the brokerage house has recommended ‘Subscribe’ to the issue.

Proceeds from the fresh issue component will be used for funding working capital requirements as well as capital expenditure requirements for purchase of specially fabricated armoured vans, the Chennai-based company said.

“Radiant is an integrated cash logistics player with a strong presence in the retail cash management segment of the cash management services industry in India, and it is one of the largest players in terms of network locations. Recently, the company has registered consistent growth. In FY22, the EBITDA and PAT margins were around 20.73% and 13.31%, respectively. In terms of valuation, the company is valued at around 17 times its annualised FY23 earnings (post fresh issue). The valuations appear to be close to its listed peers,” said Abhay Doshi, co-founder of UnlistedArena.

Incorporated in 2005, Radiant Cash Management Services Limited is the market leader in retail cash management services for banks, financial institutions, and organized retail and e-commerce companies in India. The company offers a range of services under this segment consisting of collection and delivery of cash on behalf of its clients from the end user.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.