CRISIL Ratings stated that the rating action follows weaker-than-anticipated business performance during fiscal 2024 owing to delay in execution of some of the contracts. Further, the provisioning done over the last two fiscals has significantly impacted the company’s networth and thereby its financial risk profile.

However, it will likely improve going ahead with the planned equity infusion of up to Rs 200 crores as per the latest BSE announcement. Timely infusion of equity, significant improvement in operating performance and no significant provisioning in the coming quarters will remain key rating monitorable.

The rating continues to reflect AGS’s established market position in the ATM managed services industry, increasing presence in digital payment solutions and longstanding association with customer banks. The rating is also supported by adequate operating efficiency, which ensures steady cash generation.

These strengths are partially offset by average financial risk profile, large working capital requirement and risk of proliferation of digital payments in the long term, leading to stagnancy in demand for ATMs in the domestic market.

AGS Transact Technologies is one of India’s leading providers of end-to-end cash and digital payment solutions including customized solutions serving the banking, retail, petroleum and transit sectors. The company’s operations covered approximately 2,200 cities and towns, servicing about 4,90,000 machines or customer touch points across India, as of 31 March 2024.

The company had reported an operating income of Rs 1,491 crore and a net loss of Rs 80 crore in FY24 as against an operating income and PAT of Rs 1,691 crore and Rs 37 crore recorded in FY23.