AGSTRA - AGS TRANSACT TECHNOLOGIES LIMITED Share Price

Outlook by Management:
AGS Transact Technologies anticipates sustained growth driven by strategic initiatives in digital payments, ATM expansion, and mobility ecosystems. Key focus areas include scaling the Ongo app (contactless fueling, NCMC cards) and leveraging India's mobility payment potential (e.g., metro ridership growth to 12 million daily). The ATM segment is expected to benefit from bank branch expansions and RFPs for 21,000+ ATMs/CRMs. Management aims to enhance digital revenue share (currently 14%) through open-loop prepaid infrastructure and partnerships like Indian Oil's XtraPower program.

Major Points:

1. Digital Payments:

   • NCMC Cards: 60,000+ issued; zero-KYC rollout in Chennai/Bengaluru metros.
   • Ongo Ecosystem: Piloting contactless fueling at 60+ outlets; targeting pan-India expansion.
   • Contracts: INR 58 crore (5-year) deal with Indian Oil; INR 50 crore (3-year) reconciliation contract with Indian Bank.

2. ATM & Cash Management:

   • Network: 70,000+ ATMs/CRMs managed; UPI QR cash withdrawals implemented.
   • Expansion: Banks floated RFPs for 21,000+ ATMs; focus on semi-urban/rural areas.
   • Security: Upgraded 26,000+ ATMs with GMV's solutions.

3. Financials:

   • Q2 FY25: Revenue INR 3,681 million; EBITDA INR 1,047 million (28.4% margin); PAT INR 152 million.
   • H1 FY25: Revenue INR 7,197 million; EBITDA INR 2,100 million (29.2% margin).
   • Subsidiaries: Securevalue (INR 1,007 million revenue, 21.5% EBITDA margin), ITSL (digital payments, 9% margin).

4. Debt & Efficiency: Net debt at INR 6,092 crore (ex-reverse factoring); operational streamlining to boost margins.

Management remains confident in leveraging India's cash-digital payment convergence, targeting long-term leadership in omni-channel solutions.

Question 1: Harshal Dasani (Invasset)
Question Text: "Excellent growth in the PAT, though the revenue has stayed flat to marginally negative. Just wanted to have your view on how we intend to realise the trade receivables as we saw a significant rise in them this quarter. Also, what is the credit risk that we hold on them?"
Answer Summary: The rise in trade receivables is due to a new order execution with a large PSU bank, with payments expected in Q3. Credit risk is minimal as customers include reputable banks and PSUs, ensuring reliability.

Question 2: Ankur Kumar (Alpha Capital)
Question Text: "Now, this quarter receivables have risen again. So, hope we are taking some precautions and cautions on that front end because last year also we had issues."
Answer Summary: Receivables are linked to milestone-based payments, and the company is cautious about SLAs. Customers are creditworthy, and write-offs from prior years are not expected to recur.

Question 3: Ankur Kumar (Alpha Capital)
Question Text: "On the revenue side, it is down year on year. It has improved little bit quarter on quarter. So, how should we look at it going forward?"
Answer Summary: Revenue decline stems from strategic exits from non-core businesses (e.g., retail products). Focus remains on core segments (ATM, cash management, digital payments), with growth expected in H2 FY25.

Question 4: Naitik Mutha (NV Alpha Fund)
Question Text: "In terms of a number of ATMs that we own and manage or manage overall and even in our subsidiary Securevalue, I have seen a consistent decline. When will this stop?"
Answer Summary: ATM decline resulted from public-sector bank consolidation and site rationalization. New tenders for ~21,000 ATMs/CRMs will drive deployments in H2 FY25, reversing the trend.

Question 5: Rohit Mehra (SK Securities)
Question Text: "Regarding the fuel and fleet management program with Indian Oil. How are we going to earn revenues from it?"
Answer Summary: The Indian Oil XtraPower prepaid program involves a fixed fee contract generating ~Rs.58 crore revenue over five years, covering platform management and card issuance services.

Question 6: Anisha Shah (KQ Advisors)
Question Text: "How will AGS achieve the target of 25"“30 lakh NCMC cards in 2"“3 years from the current 60,000?"
Answer Summary: Expansion of zero-KYC NCMC card issuance via dispensers in Chennai and Bangalore metros, coupled with India's ~7 crore closed-loop metro card user base transitioning to NCMC, will drive growth.

Question 7: Aryan Vijan (RV Investments)
Question Text: "Last concall mentioned debt reduction, but there has not been a significant update. Can you elaborate?"
Answer Summary: Net debt reduction is ongoing, with working capital deployed for ATM orders. Term loans are structured for gradual repayment, ensuring manageable debt levels.

Question 8: Diya Brijwani (White Whale Partners)
Question Text: "How has Securevalue's growth and margins performed in H1 FY25?"
Answer Summary: Securevalue's H1 FY25 revenue rose to Rs.2,113 million (vs. Rs.2,223 million YoY), with EBITDA margin improving to 20.1% (from 17.1%) due to portfolio rationalization and operational efficiency.

Question 9: Pravin Jadhav (Individual Investor)
Question Text: "When will the hybrid fee model coverage increase from 35% to 100%?"
Answer Summary: Hybrid model adoption is selective; high-transaction metro ATMs remain on transaction-based pricing. Rural/semi-urban deployments prioritize hybrid models, with gradual expansion expected.

Question 10: Mohit Agrawal (Individual Investor)
Question Text: "With digitalization shifting transactions to UPI/net banking, isn't this a long-term risk for ATM demand?"
Answer Summary: Banks are redeploying ATMs to semi-urban/rural areas where cash remains dominant. Recent RFPs (e.g., 21,000 ATMs) reflect sustained demand, with digital adoption in these regions slower than metros.