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Radiant Cash Management IPO  Fundamental Analysis

Radiant Cash is an integrated cash logistics player with a presence in the retail cash management (RCM) segment of the cash management services industry in India. It 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.

Its clients include some of the largest foreign, private, and public sector banks, (Axis Bank Limited, Citibank, Deutsche Bank Limited, HDFC Bank Limited among others), and the end user also includes some of the largest e-commerce companies, retail chains, NBFCs, insurance firms, ecommerce logistics players, railways and retail petroleum distribution outlets (like Bajaj Finance Limited, Equitas Small Finance Bank Limited, Ecom Express Private Limited, Delhivery Private Limited, and Hiveloop Logistics Private Limited).

The Issuer operates across five verticals, namely 1) cash pick-up and delivery; 2) network currency management; 3) cash processing; 4) cash vans /cash in transit, and 5) other value-added services.

Financial Review

Radiant Cash posted total revenues of Rs 84.38 crore for Q1FY23 and PAT of Rs 15.32 crore for the same period. For FY22, income from operations increased by 29% to Rs 286.97 crore from Rs 224.16 crore in FY21. The Issuer earned a PAT of Rs 38.20 crore as compared to Rs 32.43 crore in FY21 and Rs 36.50 crore in FY20. The revenues were reduced by 10% in FY21 against FY20 due to the pandemic.

Profitability margins are robust being above 20% for all the last three fiscals. Net margins have also been strong, in the range of 13-18% for the last three fiscals.

Return on net worth has been 9.87% (Q1FY23), and 27.33% (FY22) respectively and Debt is 0.19x of equity as at the end of FY22.

Table 1 - Financials and Ratios (Amount in Rs Crore)
Financials and Ratios Amount in INR Crores
Q1FY23 FY22 FY21 FY20
Total revenue 84.38 286.97 224.16 251.78
Revenue from operations 84.05 286.04 221.67 248.28
PAT 15.32 38.20 32.43 36.50
EBITDA 21.82 59.49 49.76 55.77
Total Assets 203.95 190.57 162.14 157.62
Net Cash from operating activities 2.99 31.08 27.64 40.85
EBITDA Margin 25.96% 20.80% 22.45% 22.46%
Net Margin 18.23% 13.35% 14.63% 14.70%

Valuation and Peer Comparison

The IPO is priced at 16.39x with annualized EPS of 6.04 for Q1FY23 calculated at the upper price band of Rs 99. P/E is 26.26x when calculated with an EPS of 3.77 for FY22. It’s listed peers as per RHP, SIS traded at P/E 21.96x, and CMS at 17.58x. However, its peers are much bigger companies than Radiant. SIS is a global company providing security solutions, facility management, and cash logistics solutions. It cannot be compared to Radiant on an absolute basis.

The valuations appear to be at the higher side seen in the context of its revenues and operations.

Table 2 - Listed Peer Comparison
Listed Peer Comparison
Particulars CMS SIS Radiant
Face Value _ _ 1
Revenue from operations (FY22 INR Crores) 1589.67 10059.1 286.04
EBITDA margin 5.48% 25.52% 20.73%
PAT margin 3.22% 14.02% 13.31%
P/E 17.58 21.96 NA
P/B 3.23 3.45 NA
EPS 15.07 22.09 3.77
NAV 140.87 82.02 13.80
Return on net worth 15.71% 17.84% 27.34%
Debt to Equity Nil 0.64 21%
CMP(on 20th Dec) 302.55 392.55 NA

Issue Details

    Radiant Cash IPO (Rs 387.90 crore) opens on 23rd Dec- 27th Dec 2022 with a price band of 94-99 per share. The retail quota is 35% and investors can apply with a minimum bid of 150 shares (Rs 14,820). The maximum lot size is 13 with 1950 shares (Rs 1,93,050). The issue is both a fresh Issue (Rs 60 crore) and an OFS (Rs 327.90 crore) by promoter shareholder, Mr. David (Rs 300 crore) and Investor shareholder; Ascent Capital Advisors.

    Fresh Issue proceeds would be utilized towards Capex for the purchase of specially fabricated armored vans (Rs 25.48 crore) and working capital (Rs 20 crore) The Promoter Group currently holds 66.39% of the shareholding of the Company and will hold x% post issue. The issue is expected to list on 4th Jan 2023.

Conclusion and Investment Strategy

    Radiant Cash is a cash logistics player in retail cash management. It also offers value-added services like vaults, strong rooms, and safes. The economy is increasingly adopting to online modes of payments like Gpay, phonepe and others. Also, the pilot phase I of digital currency has started though it might take some more time to make it fully in use. But the government efforts to promote digital modes of payment are advent. Hence, this appears as a risk for this sector. Growth momentum is not visible and the Issuer may not be able to maintain the revenue growth and margins in the future. Overpriced Issues and larger OFS are the limiting factors for the IPO. Hence one may AVOID this IPO and one may even consider buying its peers available at the same valuations in the secondary market.

    Description- Radiant cash Management operates in a sector that faces challenges from the digital modes of payments and digital currency. The issue is very expensive with timid growth prospects in the future. Hence one may avoid this IPO.

Reviewer recommends Avoid to the issue.

Review By CA Priyanka Choudhary on 15th Dec 2022

Review Author

About CA Priyanka Choudhary

CA Priyanka Choudhary, a freelance chartered accountant

Priyanka Choudhary Jain is a Chartered Accountant and an experienced credit analyst. She has worked with CRISIL as Senior Credit Analyst on ratings assignments including business and financial analysis in Corporates as well as the Public Finance Sector.

Email: [email protected]

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.



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