CMS Info Systems’ Rs 1,100 crore IPO (Initial Public Offering) opened for subscription today. The cash management company’s IPO is entirely an offer for sale (OFS) by existing shareholders of the company, who are looking to sell a total of 5.3 crore equity shares. Ahead of the IPO the company has managed to raise Rs 330 crore by allotting 1.52 crore equity shares at Rs 216 per equity share to 12 anchor investors. CMS Info Systems IPO among the long list of companies that have tapped primary markets to raise funds this month. The IPO will close for subscription on Thursday.
About the offer
Shares of CMS Info Systems are being offered to investors at a fixed price of Rs 205-216 per share, which includes a premium over the face value of Rs 10 per share. Investors can bid for 69 shares in a single lot, taking the minimum bid price to Rs 14,904 per share. Half of the IPO or 2.68 crore shares are reserved for Qualified Institutional Buyers (QIB) while 35% or 1.87 crore shares are booked for retail investors. The non-Institutional Investor (NII) category offers around 80 lakh shares on the higher end of the price band.
CMS Info Systems will not get any funds from the IPO as it is entirely an OFS. Post issue, promoter shareholding in the company will drop to 65.59% from the current 100%. Public shareholding in CMS Info Systems will increase to 34.41% from zero at this juncture. 12 anchor investors have picked up a stake in CMS Info Systems through the anchor portion of the issue. These include Nomura India Investment, SBI SMallcap Fund, Goldman Sachs, Aditya Birla Sun Life, ICICI Prudential, and BNP Paribas among others.
Should you subscribe?
“At the 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 with the multiples of its sole listed peer,” said analysts at Choice Broking. “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,” they added. SIS Limited is a listed peer of CMS Info Systems which trades at a P/E of 19.70.
CMS Info Systems is India’s largest cash management company based on number of ATM points and number of retail pick-up points. The company has a market share of 24.7%, based on the total number of ATMs in India, as well as a market share of 41.1%, based on the total number of outsourced ATMs in India, said analysts at Marwadi Financial Services. CMS Info Systems’ customers in their retail cash management business are primarily banks including Axis Bank, HDFC Bank, ICICI Bank, and IDBI Bank, among others.
Analysts at the brokerage firm value the issue at a P/E of 19.48 with a market cap of Rs 31,968 million. “We assign “Subscribe” rating to this IPO as it is India’s largest cash management company with Pan-India footprint with deep penetration in growing markets. Also, it is available at a reasonable valuation compared to its peer,” they added.
So far on day one, retail investors have subscribed to their portion of the issue 0.39 times. QIB and NII portions of the issue have seen little to no interest. Overall, the subscription tally for CMS Info Systems IPO after the initial hour of bidding is at 0.20 times.