AGS Transact Technologies Limited — Credit Ratings, 05-02-2025: Credit Rating- Revision

India Ratings & Research has downgraded AGS Transact Technologies Limited’s term loan and short-term ratings to "IND D" from "IND A/Stable/IND A1." This downgrade is primarily due to delays in debt servicing related to a bill discounting facility and a term loan over the past two months.

The company's liquidity position is currently poor, stemming from extended receivable days caused by customer payment holdbacks. As AGS strives to improve liquidity, management plans enhancements in the collection cycle and expects financial support from its promoter through share warrants.

In FY24, AGS Transact reported consolidated financials of ₹1,470 crore, a decrease from ₹1,670 crore in FY23. The company’s adjusted EBITDA was ₹200 crore, reflecting a margin contraction to 13.6% from 24.0% in the previous year. This profit decline can be attributed to rising operational costs and challenges in revenue collection, which may hinder margins further if not addressed promptly.

Investor sentiment is likely cautious as the downgrade signals increased risks and potential higher borrowing costs. However, the outlook may improve if timely debt servicing is observed for a minimum of three consecutive months. Given the current financial challenges and uncertain operational landscape, a hold is suggested for existing investors while new entrants may consider observing developments closely.