Radiant Cash Management Services IPO Company Profile:
Radiant Cash Management Services Limited (“RCMSL”) is an integrated cash logistics player with 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 July 31, 2021. The company provides services across 12,150 pin codes in India covering all districts (other than Lakshadweep) with about 42,420 touchpoints serving more than 4,700 locations as of July 31, 2021. In fiscal 2020 RCMSL was the Company with the highest EBITDA margin, ROCE, and ROE amongst organized players in the cash management services segment.
RCMSL’s marquee clients include some of the largest foreign, private, and public sector banks. Amongst the key clients are Axis Bank Limited, Citibank, Deutsche Bank Limited, HDFC Bank Limited, ICICI Bank Limited, Kotak Mahindra Bank, Standard Chartered Bank, State Bank of India, The Hongkong and Shanghai Banking Corporation Limited and Yes Bank Limited, and the end user of its services include some of the largest e-commerce companies, retail chains, NBFCs, insurance firms, e-commerce logistics players, railways and retail petroleum distribution outlets. Some of the end users of the services include Bajaj Finance Limited, Equitas Small Finance Bank Limited, Ecom Express Private Limited, Delhivery Private Limited, and Hiveloop Logistics Private Limited.
|IPO-Note||Radiant Cash Management Services Limited|
|Rs. 94 – Rs. 99 per Equity share||Recommendation: Avoid|
Radiant Cash Management Services IPO Business verticals:
- Cash pick-up and delivery: The range of services under this segment consists of the collection and delivery of cash on behalf of its clients from the end user. Based on volumes, multiple modes of transport are used for the movement of cash and valuables, 133 including two-wheelers hired vehicles, and specially fabricated armored vans. The average daily volume of cash moved from all customers in the four months ended July 31, 2021, Fiscal 2021, Fiscal 2020 and Fiscal 2019 was ₹ 350.9 crores, ₹ 364.9 crores, ₹ 430.3 crores, and ₹ 377.1 crores.
- Network currency management: The services under this segment consist of cash collection from the end user and deposit into the company’s current accounts and subsequent transfer to the client’s accounts either on the same day or on the next working day.
- Cash processing: As an integrated RCM service provider, the company also offers value-added cash processing services to its clients. These primarily are in the nature of its trained executives sorting the notes into categories such as soiled, mutilated, fit, issuable, counterfeit, ATM-ready bundles, etc.
- Cash Vans / Cash in transit: The Company also offers specially fabricated armored vans, on long-term or ad-hoc hire for the movement of cash or bullion within its client’s network.
- Other value-added services: The Company also offers man-behind counter and currency chest operations to large retail stores and banks. As on July 31, 2021, it had 11 vaults, 16 strong rooms, and 28 safes.
Radiant Cash Management Services IPO Revenue from Business verticals:
|Cash pick-up and delivery||39.44||66.25%||131.04||59.11%||164.91||66.42%||138.42||62.66%||-1.8%|
|Network currency management||12.58||21.13%||49.60||22.37%||57.50||23.16%||49.41||22.37%||0.1%|
|Cash vans / Cash in transit||3.04||5.10%||10.98||4.95%||13.65||5.50%||9.06||4.10%||6.6%|
|Other value added services||1.74||2.93%||4.15||1.87%||3.82||1.54%||6.31||2.86%||-13.0%|
|Others (COVID 19 lockdown negotiated billing)||0.00||0.00%||17.99||8.11%||0.00||0.00%||0.00||0.00%|
Radiant Cash Management Services IPO Details:
|Objects of the issue|| · To fund working capital and capital expenditure requirements
· To gain the listing benefits
|Issue Size||Total issue Size – Rs. 387.94 Cr.
Fresh Issue – Rs. 60 Cr.
Offer for Sale – Rs. 327.94 Cr.
|Face value||Rs. 1.00 Per Equity Share|
|Issue Price||Rs. 94 – Rs. 99|
|Bid Lot||150 Shares|
|Listing at||BSE, NSE|
|Issue Opens||23rd Dec, 2022 – 27th Dec, 2022|
|QIB||50% of Net Issue Offer|
|Retail||35% of Net Issue Offer|
|NIB||15% of Net Issue Offer|
Radiant Cash Management Services IPO Financial Analysis:
|Particulars||3M of FY-23(in cr.)||FY-22(in cr.)||FY-21(in cr.)||FY-20(in cr.)||CAGR (FY-20 to FY-22)|
|Revenue from Operations||84.05||286.04||221.67||248.28||4.8%|
Pre-Offer shareholding of the Shareholders:
|S. No.||Name of the Selling Shareholder||No. of Equity Shares
|Percentage of the pre-Offer paid
Up equity share capital (%)
|1.||Col. David Devasahayam||55,077,310||54.40%|
|2.||Ascent Capital Advisors India Private Limited||37,675,650||37.21%|
|Other Shareholders (Promoters & Promoter Group)|
|1.||Dr. Renuka David||8,500,000||8.39%|
Radiant Cash Management Services IPO Offer for Sale Details:
|S. No.||Name of the Selling Shareholder||Number of Equity Shares
being offered in the Offer for Sale (Up to)
|1.||Col. David Devasahayam||10,125,000 Equity Shares|
|2.||Ascent Capital Advisors India Private Limited||20,000,000 Equity Shares|
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Radiant Cash Management Services IPO Strengths :
- RCMSL provides a wide range of services across each stage of the entire cash cycle in India and believes its services help increase the velocity of cash throughout the cash cycle and increase the speed with which they handle cash. In addition, the size and wide reach of the company’s network enable it to realize further economies of scale, allowing it to increase the productivity of the operations and the profit margins.
- RCMSL’s pan-India footprint enables it to offer services to the customers in these areas as they grow their businesses and take advantage of opportunities created by the government initiatives and the resulting increased business of the customers and end users
- RCMSL’s platform offers its customers a single point of reference across India for their operations, as well as an integrated service offering. We believe our knowledge of the markets in which they operate and their regional requirements enables us to provide our customers with better quality services that are customized to their needs.
- While most of the contracts are renewed annually, RCMSL has established relationships with its key customers with four out of the top five clients having been associated with the company for a period of more than 5 years. The strength of RCMSL’s customer relationships is attributable to its ability to customize its offerings to customer specifications and requirements, as well as the track record of consistent delivery of quality and cost-effective services over the years
- RCMSL’s country-wide network is comprised of a well-laid network of 73 risk managers and 54 supervisors most of whom are retired junior commissioned officers from the armed forces. The risk management team is headed by the Director (Operations) who is assisted by a team of 127 employees, which include 70 ex-armed forces personnel and 57 other professionals. RCMSL’s network is designed in a manner that risk managers will reach any point of adverse incident within three hours.
- RCMSL has pan India presence with strong network in tier 2 and tier 3 cities.
- The company has well diversified client base across multiple sectors and has presence across all districts in India (other than Lakshadweep).
- It has prepared a robust risk management framework which include human resource as well as technological infrastructure.
- The company has shown steady financial growth with experienced management team.
With a view toward providing a seamless experience to the client, RCMSL has created API integration with a few of its clients’ ERP software. This integration of ERP allows the clients and the end-users to track real-time data for cash management which is outsourced to us and this provides the company an added benefit of being able to continue to service the client and may act as a barrier to the client to switch service providers in the future, helping in customer stickiness
Radiant Cash Management Services IPO Risk Factors:
- RCMSL’s business is highly dependent on the banking sector in India to generate revenues, and any adverse development with respect to Indian banks that affects their utilisation of and demand for cash management services could have an adverse effect on the business, results of operations, cash flows, and financial condition of the company
- A decrease in the availability or use of cash as the predominant mode of payment in India could have an adverse effect on the business, results of operations, cash flows, and financial condition of the company.
- RCMSL derives a substantial portion of its revenue from a limited number of customers. If one or more of its key customers were to suffer a deterioration in their business, cease doing business with the company, or substantially reduce their dealings with it, the revenues could decline, which may have an adverse effect on its business, results of operations, cash flows, and financial condition.
- The currency demonetisation measures imposed by the GoI in November 2016 had a significant impact on the Indian economy and cash circulation in India and there is uncertainty whether similar unanticipated measures could be adopted by the GoI in the future. Similar measures, if implemented in the future, may have an adverse effect on the business, results of operations, cash flows, and financial condition of the company.
- RCMSL’s business is exposed to operational risks for which the company has incurred and expects to continue to incur risk costs and penalties. Any material increase in these costs could have an adverse effect on the business, results of operations, and financial condition of the company
- The primary users of its cash management services are banks; nearly all of its total revenue came from the banks from FY20 to June 30, 2022.
- The top 5 customers of the co. contributed to the average of 63.13% of the total revenue from FY20 to June 30, 2022. Any loss of such customers could impact the operations of the company.
- The rising trend in the digital transactions occurring in India could have an adverse impact on the business of the company.
Objects of the Offer:
The net proceeds of the Fresh Issue are proposed to be utilized towards the funding of the following objects:
- Funding working capital requirements;
- Funding of capital expenditure requirements for the purchase of specially fabricated armoured vans;
- General corporate purposes.
Radiant Cash Management Services Limited IPO Prospectus:
- Radiant Cash Management Services Limited IPO DRHP – https://www.sebi.gov.in/filings/public-issues/oct-2021/radiant-cash-management-services-limited_53262.html
- Radiant Cash Management Services Limited IPO RHP –
Registrar to the offer:
Link Intime India Private Limited
Tel: +91 22 4918 6200
Investor grievance E-mail: firstname.lastname@example.org
Contact person: Shanti Gopalkrishnan
SEBI Registration: INR000004058
RCMSL is a market leader in the retail cash management; catering to marquee clients in foreign, private and public sector banks like Deutsche Bank, Standard Chartered, ICICI Bank, State Bank of India, Axis Bank, Yes Bank, HDFC Bank, Kotak Bank and Citi Bank. The company has currently more than 698 vehicles and is handling over 467.2 crores cash daily. The business of the company comprises 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. These verticals contributed to average 65.62%, 21.43%, 4.14%, 5.08% and 1.70% respectively from FY20 to June 30, 2022. The number of clients have increased from 57 to 68 in FY20 to June 30, 2022. The company is focusing to improve its revenue share from the value added services and also to increase market share from unorganized players in Cash Van operations. The increase in the Bank and NBFC branches and the shift from unorganized to organized service providers would drive the growth in RCM market and it is estimated to grow at a CAGR of 20.3% by Fiscal 2027. But the usage of digital payment method is increasing and the company does not have much headroom to grow. On the basis of FY22 earnings, RCMSL is offering the PE of 27.81 times on the upper price band against the industry average PE of 19.71. Hence we recommend to avoid the offering.