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Radiant Cash Management Services Ltd : Neutral

* Company Background: Radiant Cash Management Services is an integrated cash logistics player with leading presence in retail cash management (RCM) segment of the cash. They operate business across five verticals, 1) cash pick-up and delivery, 2) network currency management, 3) cash processing, 4) cash vans/cash in transit and 5) other value added services. It provides services across 13,044 pin codes in India covering about 55,513 touch points as of July 31, 2022.

* Leading integrated cash logistics player: Radiant is a leading player in RCM segment and provides a wide range of services across each stage of the entire cash cycle in India. Their services help increase the velocity of cash throughout the cash cycle and increase the speed with which they handle cash. In addition, the size and wide reach of its network helps them to further evaluate economies of scale, add more clients and support in increasing the productivity of their operations.

* Diversified client base with long standing relationship: Radiant offers RCM services across India with presence in tier 2 and tier 3+ towns and cities and that has enabled them to attract some of the largest foreign, private and public sector banks in India as their clients. Besides, they have clients from the end user sector which includes e-commerce & retail chains, NBFCs, insurance, logistics players, etc. Further, they have built long term relationships with clients which helps in renewal of annual contracts and also gives them cross selling opportunities for other products.

* Significantly built up technology to optimize operational profitability: For Radiant, technology is a key differentiator which allows to efficiently handle operations in a high-fidelity business. Their technology solutions help clients to increase their focus on their core competence without a need to make significant investments in operational infrastructure. Further, they provide technology services such as ERP software, Automation and API integration, Implementation of CPIN/OTP, Client view application, QR code Scan, Mobile Applications namely the Radmus App and Radiant Sandesh App which helps clients to track real time data, more security and faster access to information.

* Plans going forward: Radiant Cash intends to grow in end user sectors such as e-commerce, organized retail, e-commerce logistics and financial services which has strong growth potential. Also, it plans to improve the share of value added services in their revenue mix which will improve profitability.

* Financial: The company’s revenue and PAT grew by 7.3% and 2.3% CAGR over FY20-22. On the valuation front, Radiant trades at P/E of 26x FY22 EPS.

* Key Risk: 1) Highly dependent on the Banking sector. 2) Substantial portion of their revenue is derived from a limited number of customers.

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