The Chennai-based Radiant Cash Management Services, an integrated cash logistics player, has filed a draft red herring prospectus with SEBI for its IPO (Initial Public Offering). The Ascent Capital-backed company will raise funds worth Rs. 60 crores via issuance of new shares.
This IPO will also comprise an OFS (offer for sale) of over 30 million equity shares by existing promoters and shareholders. The company will use the proceeds of this issue for capital expenditure and working capital requirements.
Let us take a deeper dive into the specifics of this IPO.
In March 2005, Colonel David Devasahayam founded Radiant Cash Management Services Private Limited (RCMS). Today, the Chennai-based company is an integrated cash logistics player with a leading presence in the cash management services (CMS) industry.
The company’s clients include some of the largest banks (foreign, private and public sector), e-commerce platforms, NBFCs, insurance companies, retail chains, logistics services etc. Its operations are split into the following five verticals:
As of 31 July 2021, this company has become the largest CMS player in terms of network locations and profitability. It provides its services in 12,510 pin codes in India with a presence in all states and union territories (except Lakshadweep), serving 42,420 touchpoints and 4700+ locations.
The Radiant Cash Management Services IPO will consist of fresh issuance of equity shares worth Rs. 60 crores and an OFS of 30.13 million shares by existing shareholders. Of these, the founder Col. David Devasahayam will sell 10.13 million shares while its primary investor Ascent Capital Advisors India, will sell 20 million shares.
Currently, the promoters- Col. Devasahayam and Dr. Renuka David together hold 62.79%, while Ascent Capital owns 37.22% of the company. The book running lead managers to this issue will be Motilal Oswal Investment Advisors Limited, Yes Securities and IIFL Securities.
From the net proceeds of this IPO, the company will use Rs. 20 crores to fund its working capital requirements. The company also plans to use another Rs. 23.92 crores to buy around 220 armoured cars.
RCMS has Rs. 21.42 crores for fund-based and Rs. 21.02 crores for non-fund based outstanding amount for working capital requirements. It handles around Rs. 400 crores on a daily basis which can sometimes increase to Rs. 1000 crores. The company currently has a fleet of 694 fabricated armoured vans, which it will increase to be able to transport higher cash volumes.
Radiant Cash Management’s revenues from operations in the year ended on March 2021 stood at Rs. 221.67 crores compared to Rs. 248.28 crores in FY20. Its profit after tax in FY2021 was at Rs. 32.43 crores against Rs. 36.5 crores in the previous fiscal.
Radiant Cash Management had an authorised share capital of Rs. 12 crores and total paid-up capital of Rs. 10.13 crores. Its operating revenues for the financial year ending on 31 March 2020 stood at Rs. 100 to Rs. 500 crores while its EBITDA increased by 23.75% from FY19.
The Indian cash management service sector saw its revenue grow at 10% CAGR from FY10 to FY21, from Rs. 1,000 crores to Rs. 2,770 crores. The RCM market is set to grow at a CAGR of 20.3%, from Rs. 680 crores in FY21 to Rs. 2040 crores in FY27. Hence, Radiant Cash Management Services are looking for additional funds to grow their business and profit from the increased demand for their services.
As the DRHP for this issue has just been filed, this information is not available yet. We will update the same data when the issue gets approved by SEBI.
RCMS’s clients include the largest private and public sector banks in India. It includes names like HDFC Bank, Axis Bank, State Bank of India, Deutsche Bank, Yes Bank etc.
RCMS intends to increase its fleet capacity of handling higher daily cash volumes with 220 more specially fabricated armoured cars.
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