AGS Transact IPO Review, Broker Views, Subscribe or Avoid

IPO DetailsAGS Transact IPO GMPAllotment Status

AGS Transact IPO is all set to be the first public offer in India during 2022. The company provides customized products and services comprising ATM and CRM outsourcing, cash management and digital payment solutions including merchant solutions, transaction processing services and mobile wallets. AGS Transact IPO Review is aimed to bringing readers up to the speed with regards to the company’s business, strengths and IPO valuation.

AGS Transact has established leadership position in the Indian ATM Industry. It is second largest ATM managed service & cash management company in India. It is one of the largest integrated omni-channel payment solutions provider in India to banks & corporate clients serving across diverse industries including retail, petroleum, ecommerce and fintech sectors.

The company has deployed 207,335 payment terminals and was one of the largest deployers of POS terminals at petroleum outlets in India, having rolled out Integrated Payment Solutions (IPS) at more than 16,000 petroleum outlets with 28,986 terminals in India. It has also expanded internationally in other Asian countries comprising Sri Lanka, Singapore, Cambodia, Philippines and Indonesia.

AGS Transact IPO Review – Strengths

  • Omni-Channel Integrated Payment and Cash Solutions Provider
  • Customer Driven Portfolio with Strong Capabilities to Develop Customized Solutions In-house
  • Diversified Product Portfolio, Customer Base and Revenue Streams Leading to Cross-Selling Opportunities
  • Long-Standing Relationships with Technology Providers and Customers
  • Dedicated In-house Infrastructure and Technological Capabilities
  • Experienced Board of Directors and Senior Management

AGS Transact IPO – Risk Factors

  • Significant portion of revenues (68.1% in FY2021) from customers in the banking sector in India
  • Three biggest customers ICICI Bank, Bank of Baroda and Axis Bank account for nearly 40% of its revenues
  • Vulnerable to changes in consumer preferences and behaviour, especially towards digital payments
  • Highly regulated industry and regulatory changes could be detrimental

AGS Transact IPO – Humble Beginnings

AGS Transact IPO review wouldn’t be complete without its history and evolution. The company started in 2004 with providing banking automation solutions in India and by 2009, it diversified into offering ATM outsourcing & managed services, cash management services. A new phase of expansion took place after 2014 as the company moved into digital payment solutions and enhancing integrated digital platform.

AGS Transact IPO Analysis – Financial Performance

 FY2019FY2020FY20215M FY2022
Net income67.683.357.5(15.6)
Margin (%)

Figures in INR crore unless specified otherwise

AGS Transact Technologies Valuations & Margins

PE ratio36.48 – 38.46
RONW (%)15.9116.7010.29
ROCE (%)
EBITDA (%)24.327.026.5

AGS Transact IPO Review – Subscribe or Avoid?

A highlight of the company’s business operation is its comprehensive service offerings and the fact that over 88% of its topline is service revenue now, up from 82% in FY2019. There are several revenue streams such as monthly rental, merchant discount rate (MDR), and value added services including loan against card receivables, local account management, prepaid or loyalty program. Over 22% of fuel retail outlets in India use POS services offered by AGS Transact.

Despite the positives, the company’s business operations have struggled in the recent years, as seen in the table below. Thankfully, the performance in the latest 5 months of FY2022 is much better than previous year on annualized basis.

Over a longer term, AGS Transact is favorably placed to benefit from growing popularity of digital payments. Meanwhile, cash management business continues to provide stability. As we highlighted earlier in CMS Infosystems IPO analysis, cash management business runs largely on annuity model and offers great revenue visibility.

AGS Transact IPO is a full OFS IPO but it is important to highlight that the money raised by promoters will eventually flow back into the company’s operations through conversion of CCPS.

In terms of valuations, AGS Transact IPO is priced in the PE ratio range of 36.5 – 38.5. This appears to be on the higher side when compared with recently listed peer CMS Infosystems but it is worth noting that AGS has a broader portfolio and clocks higher revenues.

AGS Transact IPO – Broker Recommendations

Angel One –
Arihant Capital –
Ashika Research –
Asit C Mehta –
BP Wealth –
Canara Bank Securities – Avoid
Choice Broking – Subscribe for long term
Elite Wealth – Avoid
GEPL Capital –
Hem Securities – Subscribe for long term
ICICIdirect –
KR Choksey –
Marwadi Financial Services – Subscribe with caution
Motilal Oswal –
Nirmal Bang –
Religare Broking –
Samco Securities – Avoid
SMC Global –
Ventura Securities – Not rated

AGS Transact IPO Review

Anil Sharma

AGS Transact IPO Review: Industry Structure
AGS Transact IPO Review: Management Analysis
AGS Transact IPO Review: Financial Performance
AGS Transact IPO Review: Valuations


Amid changing industry structure, AGS Transact is favorably placed to benefit from growing popularity of digital payments.



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