Digital Payment Stock to Watch Out: Big Development Announced; Watch Out!
Launch of its digital payment platform, Ongo, and its plan to issue instant National Common Mobility Cards (NCMC) in partnership with Chennai Metro Rail Corporation (CMRL).
Despite a rocky start for Indian markets on Monday, following allegations made by Hindenburg Research against SEBI Chairperson Madhabi Puri Buch, AGS Transact Technologies Limited, an integrated omnichannel payment solution provider, has remained resilient. While Adani Group stocks experienced a dip, AGS Transact Technologies surged by 8 per cent to Rs 98, marking a remarkable 40 per cent increase over the past three months. The stock price has more than doubled, delivering multibagger returns from the lows of March 2023 of Rs 44.45.
The Catalyst Behind the Rally
The sharp uptrend in AGS Transact Technologies' stock can be attributed to its recent announcement regarding the launch of its digital payment platform, Ongo, and its plan to issue instant National Common Mobility Cards (NCMC) in partnership with Chennai Metro Rail Corporation (CMRL). This move aligns with the Reserve Bank of India's updated guidelines, allowing transit payments without full KYC, making commuting more efficient for millions.
Ongo’s industry-first initiative, which involves the installation of unique card dispensers across select Chennai metro stations, facilitates the instant issuance of these ready-to-use NCMC cards. This streamlined process offers a quicker onboarding experience, encouraging the rapid adoption of NCMCs across India. AGS Transact Technologies stands to gain significantly from this venture through issuance fees, interchange fees on each transaction, and float income.
The company’s plans to extend the issuance of NCMC cards to additional metro stations in Chennai and other cities reflect its broader strategy to expand its digital payments business. This initiative is well-timed, given that the daily ridership across metro systems in India is projected to grow from 10 million to 12.5 million. With Chennai Metro achieving a peak monthly ridership of over 95 lakh in July 2024, AGS Transact Technologies is positioned to capitalize on the growing demand for seamless payment solutions.
Moreover, the company’s ongoing efforts to diversify and strengthen its revenue streams are evident in its recent successful contract renewal with a major private sector bank for ATM management. This contract introduces a hybrid fee model, which is expected to contribute an additional Rs 30 crores annually to the company’s topline. AGS Transact Technologies is also in discussions with other banks for similar fee revisions, which could further boost its financial performance.
In a strategic move to bolster its financial position and fuel expansion in the high-growth digital payments segment, AGS Transact Technologies has announced a fundraise of Rs 200 crores. This significant capital infusion will be instrumental in driving the company’s long-term growth objectives, with a particular focus on expanding its digital payments and ATM outsourcing portfolios.
Mr. Ravi B. Goyal, Chairman and Managing Director, emphasized the company’s commitment to innovation and growth. He highlighted that the fundraise would not only support the expansion of the company’s digital payments business but also contribute to debt reduction. AGS Transact Technologies has already made strides in this area, having reduced its debt by Rs 100 crores last year, and aims to be debt-free within the next four years.
AGS Transact Technologies is not just focused on growth but also on innovation. The company is exploring new avenues within the digital payments space, including prepaid cards, Point-of-Sale (PoS) solutions, and mobile wallets. Recent partnerships with prominent players like Patanjali Ayurved and the issuance of NCMCs in Bangalore underscore its commitment to staying at the forefront of the payments industry.
The company’s digital payments platform, Ongo, is also leveraging AI to enhance user experience. A pilot program for a voice-controlled fueling feature through the Ongo app is just one example of how AGS Transact Technologies is pushing the boundaries of what’s possible in digital payments.
As AGS Transact Technologies continues to prioritize digital payments growth, reduce debt, and invest in innovation, it is well-positioned to capitalize on the vast potential of the Indian payments market. The company’s ambitious target to increase the contribution of its digital payments segment from 19 per cent to 25 per cent in the coming years reflects its confidence in this growth trajectory.
With the recent inauguration of a state-of-the-art cash vault facility in Bengaluru, the strengthening of its data center, and the deployment of 1,350 ATMs for the State Bank of India, AGS Transact Technologies is demonstrating its commitment to providing comprehensive payment solutions. This, coupled with its focus on innovation and strategic expansion, positions the company as a formidable player in the Indian payments landscape.
In summary, AGS Transact Technologies’ recent performance and strategic initiatives, making it a Small-Cap stock to watch for investors.
Disclaimer: The article is for informational purposes only and not investment advice.