Cash management company CMS Info Systems saw a muted listing after a lower-than-expected IPO subscription and soured investor sentiment due to rising Omicron cases. The stock opened at a 2 percent premium on December 31.
The stock started trading at Rs 218.50, against an issue price of Rs 216 per share on the BSE, while on the National Stock Exchange, it started off the day at Rs 220.20. It is the last listing in 2021.
The public issue of the company, which is promoted by Sion Investment Holdings, an affiliate of Baring Private Equity Asia, had seen a 1.95 times subscription during December 21-23. All kind of investors supported the offer with qualified institutional investors subscribing 1.98 times, retail investors portion booked 2.15 times, and non-institutional investors bidding 1.45 times the allotted quota.
CMS Info Systems’ public issue was sized at Rs 1,100 crore and was entirely an offer for sale by promoter Sion Investment Holdings.
Most analysts had a subscribe rating to the issue given that the firm is the leading player in the cash management system, has strong fundamentals and a pan-India footprint with a long-standing relationship with leading banks.
“India is the world’s 3rd largest ATM market with significant under-penetration. There are government incentives, too, favouring this sector. This gives CMS immense opportunities to scale up their business. They are supported by a senior management team comprising of highly experienced and qualified professionals. At the upper price band, the stock is valued at PE of 16.4x (based on FY22 annualized earnings) on post issue equity. The company has also displayed positive financial performance, therefore, we give a “subscribe” rating to this issue for long term,” said BP Wealth.
With strong potential for revenue growth and improvement in operating margins, Venture Securities had also recommended subscribe with a price target of Rs 294. “This represents a 36.1% upside from the issue price of Rs 216 per share.”
Having a leadership position in the cash management systems, the management feels CMS Info Systems is bound to benefit from the shifting trend towards outsourcing. As per the company, the outsourced ATMs are expected to grow at a CAGR of 10 percent and outsourced organized retail points to grow at a CAGR of 13 percent over FY21-27.