About the Company
Radiant Cash Management Services is India's leading player in retail cash management (RCM) services for banks, financial institutions and organized retail and e-commerce companies. The company offers a wide range of services consisting of collection and delivery of cash on behalf of its clients from the end user. The company is coming out with an IPO consisting of fresh issue of ~6.1mn shares and OFS of ~33.1mn shares, aggregating to a total of Rs3.88bn. The company will utilize the proceeds for funding its capex requirements and purchase of specialty armored vans.
Multiple Business Verticals
Radiant primarily provides the services: 1) Cash Delivery Services for banks, individuals and commercial and government establishments, 2) Cash Processing like sorting notes and coins, 3) Network Currency Management which involves collection, transfer and deposit of cash, 4) Cash Vans / Cash in Transit where it offers specially fabricated armored vans for movement of cash or bullion within their client's network and vaulting services for bulk cash and ATM cards, cassettes and important documents and 5) Other Value-Added Services.
Pan-India Presence
As of Jul'22, Radiant provides its services across 13,044 pin codes in India covering all districts (other than Lakshadweep) with ~ 55,513 touchpoints, serving more than 5,388 locations. Radiant had a fleet of 739 specially fabricated armored vans through a combination of leased vehicles and on short term contractual basis. The company's key clients include Axis Bank, Citibank, Deutsche Bank, HDFC Bank, ICICI Bank, SBI, Standard Chartered Bank etc. The company's management is supported by pool of ~2,012 employees.
Robust Technology
Radiant continues to focus on technology to improve its operational profitability. It utilizes automation and API integration with clients which provides real time reports for their clients. The company uses CPIN/OTP for cash collection which adds another level of security, while QR code scan allows to record cash collections without any manual intervention. Moreover, the company also has mobile application software namely the 'Radmus App' and 'Radiant Sandesh App', which is an enterprise mobile application for end-to-end reconciliation.
Financials in Brief
During FY20-22, its revenue and PAT clocked CAGR of 7% and 2% respectively, while EBITDA margin dipped slightly from 21.1% in FY20 to 20.5% in FY22. The company reported revenue of Rs2.86bn in FY22, up 29% YoY, while EBITDA increased to Rs585mn in FY22 from Rs473mn in FY21. PAT for FY22 stood at Rs382mn as against Rs324mn in FY21 and Rs365mn in FY20. Its ROE during FY20, FY21 and FY22 stood at 30.5%, 25.5% and 27.3% respectively.
Our View
The Retail Cash Management (RCM) market was estimated at Rs6.8bn in FY21 which is projected to reach Rs20.4bn by FY27E growing at a CAGR of 20.3%. The RCM market will be bolstered by the growth in organized retail sector and the corresponding outsourcing potential. Radiant also has ability to cross sell value-added services such as network currency management and cash processing services. Based on FY22 earnings the company is valued at 27.8x P/E, 17.2x EV/EBITDA and 3.5x EV/Sales. In view of the leading integrated cash logistics player, strong financial track record with healthy double digit operating margins (EBITDA margin of >20%) and double digit return ratio (RoE of 27.3%), strong presence across India, multiple key marquee clients, focus on continuous technology improvement and attractive valuation, we recommend 'SUBSCRIBE' to the issue.
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