Radiant Cash Management Services IPO opens on Dec 23; price band at ₹94-99 per share

• Radiant Cash Management Services to open its IPO on December 23.
• The ₹388 crore IPO is a combination of a fresh issue worth ₹60 crore, and an offer for sale by promoters and shareholders worth ₹328 crore.
• The net proceeds from the fresh issue will be used towards funding working capital requirements, capital expenditure needs for the purchase of specially-fabricated armoured vans and general corporate purposes.
• The price band of the IPO is set at ₹94-99 per share.

Radiant Cash Management Services, a Chennai-based cash logistics player, will open its initial public offering (IPO) on December 23 and close on December 27. The price band of the IPO is set at ₹94-99 per share.

The company plans to raise ₹388 crore through a fresh issue worth ₹60 crore, and an offer for sale by promoters and shareholders worth ₹328 crore.

The net proceeds from the fresh issue will be used towards funding working capital requirements, capital expenditure needs for the purchase of specially- fabricated armoured vans and general corporate purposes.

Incorporated in 2005, Radiant Cash Management Services is a cash logistics player that caters to banks, financial institutions, and organised retail and e-commerce companies in India.

It provides services across 13,044 pin codes in India covering all districts (other than Lakshadweep) with about 55,513 touch points serving more than 5,388 locations as of July 31, 2022, it said.

The company operates across five verticals – cash pick-up and delivery, network currency management (also known as cash burial in industry parlance), cash processing, cash vans/cash in transit and other value added services.

Amongst the key clients of Radiant Cash Management are Axis Bank, Citibank, Deutsche Bank, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Standard Chartered Bank, State Bank of India, HSBC and Yes Bank.

Radiant Cash Management Services’ key financial metrics:
Source: Red herring prospectus

Last December, another cash management firm CMS Info Systems had hit the market and made its stock market debut with tepid listing gains. So far in 2022, CMS Info Systems’ stock has gained nearly 27%.

Move towards cashless economy could impact business model
The company’s business operations are significantly dependent on cash remaining the predominant mode of payment in India. It derives 99% of its revenue from operations relating to transport, handling or management of cash.

The increased usage of credit cards, debit cards, POS terminals, stored-value cards, UPI and mobile payments could result in a significant reduction in the use of cash as a payment method, says the company in its red herring prospectus.

“Promoting cashless payments has been a key part of the Government of India’s broader efforts, among other things, to curtail the circulation of counterfeit Indian currency, and the RBI and the Government of India have publicly stated that they are undertaking initiatives to encourage greater adoption of electronic and cashless payment methods, which could reduce the amount of cash in circulation and the use of cash as the preferred mode of payment in India,” the company said.

Given the large volumes of cash the company handles, they are exposed to various operational risks, including armed robbery, end-customer or third-party fraud, theft or embezzlement by employees or personnel hired by the company on contract etc.

The company has lost cash in transit in the past three years because of such reasons – ₹1.88 crore in FY22, ₹2.69 crore in FY21 and ₹2.51 crore in FY20. However, it has covered the lost money though insurance coverage.

The currency demonetisation measures imposed by the government in November 2016, which had a significant impact on the Indian economy and cash circulation in India, impacted the services of the cash management company.

Besides, the Covid-19 pandemic has had and continues to have adverse effects on the company’s business, its operations and financial condition.

“The demand for our services and the services of our customers has been significantly impacted as a result of Covid-19. For example, the total number of end users declined from 3,014 in fiscal 2020 to 2,469 for fiscal 2021, while the total number of touch points serviced declined from 47,270 in fiscal 2020 to 42,420 for fiscal 2021,” said the company.

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