CMS Info Systems IPO: CMS Info Systems, India’s largest cash management company based on number of ATM points and number of retail pick-up points as of March 31, 2021, is set to open its initial public offering (IPO) on Tuesday, December 21. The issue is set to be open for three days for bidding, after which it will close on December 23, Thursday. The firm is looking to mop up Rs 1,100 crore through its initial public offering, with 5.093 – 5.366 crore shares up for sale. The issue is an entirely offer for sale one, and CMS Info Systems will not receive any proceeds from the IPO.
The CMS Info Systems IPO has a price band of Rs 205 to Rs 216 per equity shares, the company has notified. As on August 31, 2021, the company has pan-India fleet of 3,965 cash vans and the network of 238 branches and offices. It operates mainly in three business segments — Cash management service that includes end-to-end ATM replenishment services, Managed services that includes banking automation product sales, deployment and associated annual maintenance; and Other services that includes end-to-end financial cards issuance and management for banks and card personalisation service.
The Rs 1,100 crore issue is entirely an offer for sale by selling promoter Sion
Investment Holdings Pte. Ltd, which will receive all the proceeds from the issue. The promoter currently holds 100 per cent of the company. After the public offer, it will come down to 65.59 per cent.
The proceeds from the OFS will be used to carry out an offer for sale of equity shares by promoters aggregating up to Rs 1,100 crore and to achieve the benefits of listing the equity shares on the stock exchanges. The lot size of the offer is 69, which means that a bidder can buy a minimum of 69 shares and in multiples of 69 thereof.
The unlisted shares of CMS Info Systems IPO was fetching a premium of Rs 35, which is just 16 per cent of the upper price band of Rs 216. The low grey market premium of CMS Info Systems IPO indicated a tepid listing for the issue later this month.
CMS Info Systems is a leading player in a consolidating market with strong fundamentals and has a pan-India footprint with deep penetration in growing markets. Moreover, it boasts of a track record of strong productivity and operational excellence.
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Angel One in a note said, “At the higher end of the price band CMS would be trading at P/E multiple of 19x FY21 EPS of `11.4 which would be at a slight premium to SIS. Moreover 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. Moreover the company’s business would be impacted in case we witness a third Covid wave in India. Given the dependence on a single sector, high client concentration and possible impact on business due to a third Covid wave we have a NEUTRAL recommendation on the IPO.”
“At higher price band of Rs. 216, CMS is demanding a P/E multiple of 19x (to its FY21 earning of Rs. 11.4), which is in-line to the multiple of sole listed peer. Considering the continued vital role of the cash in the domestic economy and the company diversified product portfolio across the cash management value chain coupled with its dominant market position in the sector, we assign a “SUBSCRIBE” rating for the issue,” said Choice Broking in a report.
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