The credit rating stated that the revision in outlook reflects only limited improvement in the debt protection metrics of AGS, compared to expectations, with debt levels continuing to be high due to slow recovery in receivables.

The rating continues to reflect healthy business risk profile of AGS, driven by its 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.

"Recovery in pending receivables will be critical to ensure sustained improvement in debt protection metrics and financial risk profile over the medium term, as cash accrual will only suffice to meet repayment obligations and a part of the capex; this will remain a key monitorable,” CRISIL said in a statement.

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. Operations covered approximately 2,200 cities and towns, servicing about 4,90,000 machines or customer touch points across India, as of 30 September 2023.

The company has reported a consolidated net loss of Rs 60.90 crore in the quarter ended September 2023 as against net profit of Rs 20.67 crore during the previous quarter ended September 2022. Sales declined 8.96% to Rs 376.54 crore in Q2 FY24 as compared with Q2 FY23.

The scrip had lost 0.86% to end at Rs 88.37 on the BSE on Friday.

Domestic equity markets are shut today on account of Guru Nanak Jayanti.