As the initial public offer (IPO) of India’s largest cash management company CMS Info Systems Limited opens on Tuesday, the brokerage firms give a mixed reaction to the share sale of the company. The IPO is a complete offer-for-sale with an issue size of Rs 1,100 crore and a price band of Rs 205-216 per share.

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Mainly catering to the BFSI segment, it is the largest cash management company based on the number of ATM points and the number of retail pick-up points as of March 31, 2021. 

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The business includes installing, maintaining, and managing assets and technology solutions on an end-to-end outsourced basis for banks under long-term contracts. 

While listing out the positives of CMS Info Systems, Angel One, a domestic brokerage firm, stated that the company is a leading market player with strong fundamentals; strong pan-India; network of 3,965 cash vans and 238 branches & offices; longstanding customer relationships with increased business opportunities and Integrated business platform offering a range of products and services.

CMS Infosystems derives the majority of its revenues by providing various services to the banking sector, says the brokerage firm, adding further, “There is no comparable company in the listed space which is exclusively engaged in the portfolio of business similar to the company.”

At the higher end of the price band, the company would be trading at P/E multiple of 19x FY21 EPS of Rs 11.4 which would be at a slight premium to SIS, Angel One also pointed out. 

It further said in report that CMS is primarily dependent upon the banking sector for most of its revenues and has high client concentration with top three customers accounting for 44.6 per cent of revenues for the first five months of FY2022.

On the negative side, the c the company’s business would be impacted if a third Covid wave hits India, says Angel One. And, hence have Neutral recommendation on the IPO given the dependence on a single sector, high client concentration and possible impact on business, it added. 

Similarly, Marwadi Financial Services assign Subscribe rating to CMS’ IPO as it is India’s largest cash management company with Pan-India footprint with deep penetration in growing markets and it is also available at reasonable valuation compare to its peer.

In the last three years, the company’s profit after tax and its margins have consistently improved, as well as the earnings per share (EPS) and EBITDA margins too. 

The issue is kept 50 per cent reserved to qualified institutional buyers, while non-institutional investors quota gets 15 per cent and Retail investors have been given second highest quota of 35 per cent during the IPO.