Radiant Cash Management IPO: Rs 388 crore issue opens for public today, here’s everything you need to know

The Rs 388 crore Radiant CMS IPO will be available for subscription till Tuesday, December 27, 2022, and the price band of the company has been fixed at Rs 94-99 per share.

The IPO comprises a fresh issue of shares of up to Rs 60 crore and an offer-for-sale (OFS) of up to 33,125,000 shares by the promoter David Devasahayam and private equity firm Ascent Capital Advisors India. Ascent Capital acquired a 37.2 per cent stake in the company in 2015.

The net proceeds from the fresh issue will be used for working capital requirements, capital expenditure requirements for purchase of specially fabricated armoured vans and general corporate purposes, according to the information given in the red herring prospectus (RHP).

Chennai-based Radiant Cash Management Services is an integrated cash logistics player with a leading presence in the retail cash management (RCM) segment of the cash management services industry in India.

Radiant CMS provides services across 13,044 pin codes in the country covering all districts (other than Lakshadweep) with about 55,513 touch points serving more than 5,388 locations as of July 31, 2022.

“Our marquee clients include some of the largest foreign, private and public sector banks, and the end user of our services include some of the largest e-commerce companies, retail chains, NBFCs, insurance firms, ecommerce logistics players, railways and retail petroleum distribution outlets,” the company said in the RHP.

Half of the issue size has been reserved for qualified institutional buyers (QIBs), 15 per cent for non-institutional investors and the remaining 35 per cent for retail investors.

Investors who wish to subscribe to Radiant CMS IPO can bid in a lot of 150 equity shares and multiples thereafter. At the upper price band, they will be shelling out Rs 14,850 to get a single lot of Radiant Cash Management Services. The shares will be listed on both BSE and NSE.

The applicants also must note that the cut-off time for UPI mandate acceptance is Tuesday, December 27, 2022, upto 5:00 pm, the last day of IPO bidding. Further bids with confirmed status of mandate amount blocked (RC100) shall be considered as valid applications and hence, investors are advised to submit their UPI applications in IPO well in advance to avoid any last minute technical/systemic constraints that may hamper their ability to participate in IPOs by successfully accepting the mandate.

IIFL Securities, Motilal Oswal Investment Advisors and YES Securities (India) are the book-running lead managers to the offer while Link Intime India is the registrar of the issue.

Before heading into the IPO, the company on Thursday raised over Rs 116.38 crore (Rs 1,16,38,12,419) from 16 anchor investors in lieu of 1,17,55,681 equity shares at Rs 99 each, data from the stock exchanges showed.

The anchor investors include Sundaram Alternative Investment Trust, HDFC Mutual Fund, Aditya Birla Sun Life MF, Emerging Business Fund, Citigroup Global Markets Mauritius, BCAD Fund, Societe Generale, BNP Paribas Arbitrage and UTI MF among others.

Speaking to indianexpress.com about Radiant CMS IPO, Ravi Singh, vice president and head of research at Share India Securities said, “Radiant CMS’ client base include some of the big organisations like HDFC Bank, Axis Bank, Kotak Mahindra Bank, Yes Bank, SBI, Deutsche Bank and Standard Chartered Bank. The company reported consistent profits with double-digit EBITDA margins, greater than 21 per cent since FY19 and RoE of 27 per cent. At higher price band (Rs 99), the IPO is valued at a PE of 26.25x its FY22 earnings, which seems to be highly priced when compared with its peers like CMS Info Systems and SIS Ltd. Given the potential growth in CMS segment in future led by expanding banking system in Indian population, we expect the company has potential to catch bigger market share in coming years. Hence, we recommend to Subscribe for long-term gains.”

The research team at Reliance Securities in their IPO note has given a “Subscribe” rating to the offer.

“The Retail Cash Management (RCM) market was estimated at Rs 6.8 billion in FY21 which is projected to reach Rs 20.4 billion by FY27E growing at a CAGR of 20.3 per cent. The 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. In view of the leading integrated cash logistics player, strong financial track record with healthy double digit operating margins (EBITDA margin of >20 per cent) and double digit return ratio (RoE of 27.3 per cent), strong presence across India, multiple key marquee clients, focus on continuous technology improvement and attractive valuation, we recommend ‘SUBSCRIBE’ to the issue,” Reliance Research said in its report.