Radiant Cash Management IPO to open tomorrow. Subscribe or not?

Notably, the IPO is a mixture of a fresh issue and an offer for sale. The equity shares offered have a face value of Re 1 each.

The company’s fresh issue is worth ₹60 crore, while its offer for sale is up to 33,125,000 equity shares aggregating to ₹327.94 crore at the upper price band.

Overall, the company is looking to raise nearly Rs388 crore from the public offer.

Investors can bid for a minimum of 150 equity shares and in multiples of 150 equity shares thereafter.

Of the total issue size, 50% is reserved for qualified institutional buyers (QIBs), while 15% of the size is kept for non-institutional investors and the remaining 35% for retail individual investors for bidding.

Companies like IIFL Securities, Motilal Oswal Investment Advisors, and Yes Securities are acting as the book-running lead managers of the IPO. While Link Intime India is the registrar of the offer

In the IPO note, Arafat Saiyed Research Analyst at Reliance Securities said, “The Retail Cash Management (RCM) market was estimated at ₹6.8 billion in FY21 which is projected to reach ₹20.4 billion by FY27E growing at a CAGR of 20.3%.”

Saiyed’s note added, “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.”

Further, the stock brokerage’s analyst highlighted that 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%) and double-digit return ratio (RoE of 27.3%), strong presence across India, multiple key marquee clients, focus on continuous technology improvement and attractive valuation, we recommend ‘SUBSCRIBE’ to the issue,” Saiyed’s note added.

Radiant has a leading presence in the retail cash management (“RCM”) segment of the cash management services industry in India and is one of the largest players in the RCM segment in terms of network locations or touch points served as of March 31, 2022. Its 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, e-commerce logistics players, railways, and retail petroleum distribution outlets.

The company provides services across 13,044 pin codes in India covering all districts (other than Lakshadweep) with about 55,513 touchpoints serving more than 5,388 locations as of July 31, 2022.

The equity shares offered in the IPO will get listed on stock exchanges BSE and NSE.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.