Any current/future new fundraising through debt or equity?

As of June 30, 2022, AGS Transact Technologies had a net debt of around Rs.645.1 crore. The company plans a capex of around Rs.125 to Rs.250 crore for the full year. Strong cash flows and profitability are expected to support debt repayment and investment. Management expects the debt level to remain at a similar range and not grow beyond current numbers. Incremental debt, if any, would likely be supported by contracts with banks via ATM, PoS, and security business deployments. No explicit mention of any new fundraising through debt or equity in the near future was stated. The company is confid

Any current/future capex/capital investment/strategic investment?

The company has planned a capex range of approximately Rs.125 Crores to Rs.250 Crores for the full financial year. Strong cash flows and profitability are expected to support the capex and debt management. The current debt level stands at around Rs.6451 million as of June 30, 2022, with planned repayments in the year. Incremental debt is expected to align with contracts related to deployment of ATMs, PoS machines, and vehicles for security business, suggesting controlled future borrowing. The management is confident about continued investments tied to business growth such as ATM and PoS deploy

Future growth expectations in sales/revenue/volumes?

The company targets double-digit revenue growth in FY2023 and FY2024 driven by multiple factors. Growth in payment solutions segment (constituting 80% of revenue) including ATM outsourcing, cash management, and digital payments. Positive impact expected from regulatory initiatives like Cassette swap and RBI guidelines leading to increased transactions. Continued expansion in CRM deployments with banks focusing on multi-functional machines (cash withdrawal and deposit). Increasing deployment of PoS machines, especially with oil marketing companies, targeting over 20,000 incremental PoS machines

Future growth expectations in earnings/operating earnings/profits/EPS?

The company is targeting double-digit revenue growth for FY23, supported by a strong order book and robust pipeline of RFPs. Management is confident FY23 will be the best year ever, aiming for the highest profit after tax (PAT) to date, surpassing the previous high of Rs.83 Crores in FY20. Q1 FY23 PAT was Rs.192 million compared to a loss of Rs.288 million in Q1 FY22, showing strong improvement. EBITDA margin sustained at around 25%+, with Q1 FY23 adjusted EBITDA growing 35% YoY and 50% QoQ. Operational leverage is expected to improve profits as topline grows, driven by payment solutions and d

Current/ Expected Orderbook/ Pending Orders?

The company holds a strong order book for FY23 across its business segments. Payment Solutions segment (ATM outsourcing, cash management, digital business including PoS solutions and Ongo initiatives) forms the major part. ATM outsourcing and cash management business continues to run on long-term contracts with banks, driven by bank expansion strategies and debit card issuance. The company is seeing a healthy pipeline of fresh RFPs from leading public and private sector banks. PoS deployment has strong visibility especially with oil marketing company contracts, with around 20,000+ PoS machines

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AGS Transact Technologies LtdQ2 FY22Financial Technology (Fintech)

AGS Transact Technologies Ltd Q2 FY22 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹2.69Market Cap: ₹32 CrSector: Financial Technology (Fintech)

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Full analysis

Revenue guidance

Category 3

→The company targets double-digit revenue growth in FY2023 and FY2024 driven by multiple factors.
→Growth in payment solutions segment (constituting 80% of revenue) including ATM outsourcing, cash management, and digital payments.
→Positive impact expected from regulatory initiatives like Cassette swap and RBI guidelines leading to increased transactions.
→Continued expansion in CRM deployments with banks focusing on multi-functional machines (cash withdrawal and deposit).
→Increasing deployment of PoS machines, especially with oil marketing companies, targeting over 20,000 incremental PoS machines.
→Focus on operational leverage that will improve profitability alongside topline growth.
→Strong order book and pipeline with many RFPs in the market boost visibility for higher revenues.
→Incremental revenue streams from subsidiaries and other digital businesses expected to contribute to growth.
→Seasonal uplift in transactions expected in Q2 and Q3 supporting volume growth.

Margin guidance

Category 3

→The company is targeting double-digit revenue growth for FY23, supported by a strong order book and robust pipeline of RFPs.
→Management is confident FY23 will be the best year ever, aiming for the highest profit after tax (PAT) to date, surpassing the previous high of Rs.83 Crores in FY20.
→Q1 FY23 PAT was Rs.192 million compared to a loss of Rs.288 million in Q1 FY22, showing strong improvement.
→EBITDA margin sustained at around 25%+, with Q1 FY23 adjusted EBITDA growing 35% YoY and 50% QoQ.
→Operational leverage is expected to improve profits as topline grows, driven by payment solutions and digital business segments.
→ESOP costs expected to decline from Rs.11.3 Crores in FY22 to about Rs.8.5 Crores for FY23, aiding profitability.
→Interest cost reduction (Rs.1100 million decrease) following debt repayments will further benefit earnings.

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Fundraise plans

Yes

→As of June 30, 2022, AGS Transact Technologies had a net debt of around Rs.645.1 crore.
→The company plans a capex of around Rs.125 to Rs.250 crore for the full year.
→Strong cash flows and profitability are expected to support debt repayment and investment.
→Management expects the debt level to remain at a similar range and not grow beyond current numbers.
→Incremental debt, if any, would likely be supported by contracts with banks via ATM, PoS, and security business deployments.
→No explicit mention of any new fundraising through debt or equity in the near future was stated.
→The company is confident of managing its financing through operational cash flows and existing resources.

Order book

Yes

→The company holds a strong order book for FY23 across its business segments.
→Payment Solutions segment (ATM outsourcing, cash management, digital business including PoS solutions and Ongo initiatives) forms the major part.
→ATM outsourcing and cash management business continues to run on long-term contracts with banks, driven by bank expansion strategies and debit card issuance.
→The company is seeing a healthy pipeline of fresh RFPs from leading public and private sector banks.
→PoS deployment has strong visibility especially with oil marketing company contracts, with around 20,000+ PoS machines left to deploy immediately.
→The management sees significant opportunities in expanding ATM and CRM deployments, especially as banks focus more on CRM machines.
→Strong performance and order book in PoS business, ATM outsourcing, cash management, and digital business indicate robust growth potential and revenue visibility for the year.

Capex plans

Yes

→The company has planned a capex range of approximately Rs.125 Crores to Rs.250 Crores for the full financial year.
→Strong cash flows and profitability are expected to support the capex and debt management.
→The current debt level stands at around Rs.6451 million as of June 30, 2022, with planned repayments in the year.
→Incremental debt is expected to align with contracts related to deployment of ATMs, PoS machines, and vehicles for security business, suggesting controlled future borrowing.
→The management is confident about continued investments tied to business growth such as ATM and PoS deployment, digital payment solutions, and other automation services.
→Ongoing initiatives like the "Ongo strategy" rollout in subsequent quarters indicate strategic investments in expanding digital business segments.

How does AGS Transact Technologies Ltd rank vs peers in Financial Technology (Fintech)?

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1AGS Transact Technologies Ltd

Rev 3Mar 3

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