Radiant Cash Management Services IPO: 5 Things to Know

• 'Chota packet bada Dhamaka!'

This precisely explains the stellar listing of DroneAcharya Aerial Innovations IPO.

The company came out with its IPO at a price band of Rs 52-54 and shares of the company were listed last week at a price of Rs 102. This results in more than 90% gains. On the day of listing itself, the company hit its upper circuit.

This was actually on the cards...as the company is involved in the exploding drone market, the hype was real as investors applied for the IPO without thinking twice.

A defence sector stock hugely oversubscribed and listing at huge premium... this reminds me of the best IPO of the year 2021: Paras Defence and Space Technologies.

Seems like defence and listing gains have shaken hands. Just like Paras Defence, the DroneAcharya Aerial Innovations IPO was one of the best IPOs of 2022 which saw massive listing gains.

Now, as we move to a new year, two companies have lined up their IPOs and will probably be the final IPOs of calendar year 2022. Speaking of new year these are top 5 IPOs to watch out for in 2023.

Let's take a look at the ongoing IPO of Radiant Cash Management.

The company's IPO opened for subscription on 23 December 2022.

Here are the key details about the IPO.

Issue period: 23 December 2022 to 27 November 2022

Issue size: Rs 387.9 crore (about Rs 3,879 million) (fresh issue for Rs 600 m, for sale for Rs 3,279 m)

Price band: Rs 94 to Rs 99 per equity share

Bid lot: 150 shares and multiples thereof

Application limit: Minimum one lot maximum thirteen lots

Face value: Rs 1 per equity share

The company has reserved not less than 50% shares of the offer for qualified institutional buyers (QIB). It has reserved not less than 15% for non-institutional buyers (HNI). Hence not more than 35% of shares are available for retail individual investors.

Tentative IPO allotment date: 30 December 2022

Tentative listing date: 04 January 2022

#1 About the company

Incorporated in 2005, Radiant Cash Management Services is the market leader in retail cash management services for banks, financial institutions, organised 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 our clients from the end user.

The company is one of the largest players in the retail cash management (RCM) segment in terms of network locations or touch points served, as of 31 March 2022.

The company's key clients are Axis Bank, Citibank, Deutsche Bank, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Standard Chartered Bank, State Bank of India, The Hongkong and Shanghai Banking Corporation (HSBC), and Yes Bank.

#2 Financial position

For the year ended 31 March 2021, the company's revenue fell 11% to Rs 2,241.6 m. However, in the next year (year ended 31 March 2022), the company's revenue rose 28%.

The company has high expenses for a service sector firm. For the financial year ended 2022, expenses formed 81.9% of the total revenue.

Its basic earnings per share (BEPS) is quite low. In the past three years it has barely moved. Even its return on net worth (RoNW) has not been able to go back up to March 2020 levels.

Financial snapshot

Particulars	31-Mar-22	31-Mar-21
Revenues (Rs m)	2,869.70	2,241.60
Revenue Growth (%)	28.00%	-11.00%
Expenditure Before Tax	2,349.20	1,791.10
% of Total Income	81.9	79.9
Net Profit	382.1	324.3
Net Profit Margin (%)	13.3	14.5
Net Worth	1,397.60	1,270.90
Return on Net Worth (%)	27.3	22.5
Basic Earnings per share (Rs)	3.8	3.2

Data Source: Company's Red Herring Prospectus (RHP)

#3 Peer comparison

As per the company's red herring prospectus (RHP), SIS and CMS Info Systems are among its listed peers.

Peer Comparison

Company	Total Income (2022) (Rs m)	Net Profit	EPS (Basic) (Rs)	Return on Net Worth (%)
Radiant Cash Management Services	2,869.70	382.1	3.8	27.3
SIS	1,01,117.60	3,223.00	22.1	15.7
CMS Info Systems	15,975.80	2,240.00	15.1	17.8

Data Source: Company's Red Herring Prospectus (RHP)

#4 Arguments in favour of the business

• It has a leading integrated presence in the industry. It is one of the largest RCM segment players in terms of network location or touch points.
• Due to its wide-spread networks, the company is in a position to cross sell value-added services such as network currency management and cash processing services.
• It has an experienced management team and is also backed by a reputed institutional investor - Ascent Capital.

#5 Risk factors

• It is heavily depended on a handful of its customers for its business. During the financial year 2021-22, the top three customers generated 43.1% of the total revenues.
• Digital payments in India have increased rapidly. This is a worry for the company. If cash stops being predominant mode of payment, then the company will be adversely affected.

To conclude

The last IPO of 2022 is already here.

So far as of today morning, the IPO is subscribed 4%. This shows a weak demand for the company's shares.

Will bright prospects of the industry help fetch more bids from investors on the final day?

Stay tuned to get further updates on this IPO and all upcoming IPOs in the market.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...