AGS Transact Technologies Limited (AGSTRA) Q1 FY23 Earnings Concall Transcript

AGS Transact Technologies Limited (NSE: AGSTRA) Q1 FY23 Earnings Concall dated Aug. 08, 2022

Corporate Participants:

Ravi Goyal — Chairman and Manager Director

Saurabh Lal — Chief Financial Officer

Analysts:

Nitin Sharma — Mcpro Research — Analyst

Sanjay Awatramani — Envision Capital — Analyst

Vignesh Iyer — Sequent Investments — Analyst

Bhavik Dave — Nippon India — Analyst

Naveen Jain — Florintree Advisors — Analyst

Amit Chandra — HDFC Securities — Analyst

Deepak Poddar — Sapphire Capital — Analyst

Avadhooot Joshi — New Berry Capital — Analyst

Presentation:

Operator

Good morning, ladies and gentlemen. Welcome to AGS Transact Technologies Limited Q1 FY ’23 Earnings Conference Call. This conference call may contain forward-looking statements about the Company, which are based on beliefs, opinions and expectations of the Company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.

[Operator Instructions]

I now hand the conference over to Mr. Ravi Goyal, Chairman and MD, AGS Transact Technologies Limited. Thank you, and over to you, sir.

Ravi Goyal — Chairman and Manager Director

Good morning, everyone. A very warm welcome to each one and thank you for joining our Q1 FY ’23 earnings call. On this call, I’m joined by our CFO, Mr. Saurabh Lal; Mr. Stanley Johnson, our Executive Director; Mr. Shailesh Shetty, Managing Director of Securevalue, and SGA, our Investor Relations Advisors. The quarter that went by, witness several tailwinds on the macro level. The country’s economy begin to open as a result of reciting impact of the pandemic and sub-setting geopolitical tensions. This has led to an increase in mobility, greater spending and thereby, an increased cash in circulation.

I’m delighted to share with you that we have started the financial year on a positive note with quarter one FY ’23 EBITDA growing at 35% on a year-on-year basis and 50% growth rate on a quarter-on-quarter basis. Our profit after-tax stood at INR192 million in Q1FY ’23, against the loss of INR288 million for Q1 FY ’22. Our total income stood at INR4,272 million for Q1 FY ’23 as against INR4,135 million for Q1FY ’22. My colleague, Saurabh Lal, our CFO, will give you a detailed update on the financials after my speech.

Overall, our business continues to be on a growth trajectory as reflected in our operating business performance in the quarter, which would substantiate our overall FY ’23 performance. Our endeavor is to deliver a double-digit growth in the revenues and a higher profitability in FY ’23. In fact, we are targeting our highest ever PAT in FY ’23, and we’ll continue to sustain our EBITDA margin of 25% plus.

As of June 30, 2023, AGS had installed, maintained or managed a network of approximately 73,179 ATMs and cash recycling machines. We provided cash management services to more than 44,300 ATMs through our wholly-owned subsidiary, Securevalue India Limited. We installed over 2,41,000 merchant point of sale terminals and approximately 48,500 cash billing terminals. We have also automated 18,000 petroleum outlets and installed more than 89,100 color dispensing machines. That being said, our focus is on creating one of the largest integrated omni-channel payment platform in the country by providing innovative digital and cash payment solutions to our clients across sectors. We will continue to leverage our digital payment solution, our digital payment platform Ongo to provide payment as a convenience to corporates, merchants and consumers through our comprehensive portfolio mix which includes all-in-one cast and value-added services like prepaid or loyalty programs, et cetera. In the upcoming quarter, we are ready to roll out the Ongo app, which will enable the customers to avail and manage various online and offline payments, including fuel payments offered via our Ongo ecosystem.

We are very optimistic about ATM outsourcing market, owing to a healthy pipeline of fresh RFPs from leading public and private sector banks, RBI’s recent initiatives such as the Interoperable Cardless Cash Withdrawal, popularly called as ICCW on ATMs via UPI and setting up 75 digital banking units in 75 districts of the country by scheduled commercial banks offers a vast opportunity to AGSTTL to expand our existing business. The digital business payment business contributed 15% of our total revenues from operations. It includes revenue from POS machines, the ATM outsourcing business, which works on a transaction or a fixed fee basis contributed approximately 50% of our quarterly top line. Another 16% of top line came from AMC services and upgrades.

Cash management which is carried out by our wholly-owned subsidiary Securevalue India is a key component of our ATM outsourcing business. Through this segment, we oversee cash management for both captive and managed ATMs, and it has contributed to approximately 15.4% to our total overall revenue from operations. Our service revenue continues to strengthen the income from these services as recurring in nature and is supported by multi-year contracts. Our long-term relationships with our customers across industries puts us in an advantageous position for our new business and cross-selling opportunities, and enhances our market reputations. We will continue to leverage our key strengths, technical capabilities to innovate and offer customized payment solutions across value chain which would further contribute towards strengthening of the overall payment infrastructure in the country.

Now, I would request my colleague, Saurabh Lal, CFO of AGS Transact Technologies to share the financial highlights of Q1 FY ’23. Saurabh, over to you.

Saurabh Lal — Chief Financial Officer

Thank you. Ravi. Good morning, everyone. Let me just take you through the financial performance of Q1 FY ’23. In the quarter that went by, the total revenue of the Company stood at — sorry, my bad, it’s a Group revenue stood at INR4,272 million versus INR4,136 million for Q1 FY ’22. Overall, our performance in the quarter saw improvement due to increase in the transaction, increase implementations of various initiatives by various regulators like cassette swap and RBI guidelines. ITSL which is also a wholly owned subsidiary has also started achieving the operational leverages because of all India network that we had.

Now talking about the EBITDA number, the adjusted EBITDA of the Group for the quarter one of FY ’23 stood at INR1,269 million as against INR910 million in Q1 of FY ’22. Adjusted EBITDA margin for Q1 FY ’23 stood at around a very healthy 29.7% as against 21.9% in Q1 of FY ’22. I would also like to highlight that our EBIT for this quarter was INR632 million during the quarter, and it has more than doubled as compared to the corresponding period in FY ’22. During FY ’22, AGS redeemed outstanding NCDs worth INR5,500 million, which was part of the exact offer of the Company’s IPO. We had earlier highlighted that the finance cost will get a substantial benefit and it will start accruing from this quarter onwards, and it has now started flowing in our numbers. Our reported PAT for this quarter, this quarter one of FY ’23 stood at INR192 million as against a reported loss of INR288 million for quarter one FY ’22.

We have been guiding and updating the investors and other analysts that we are expecting a lower interest expense for quarter starting FY ’23. And after the repayment of the NCDs post our completion of the IPO, this has finally come to come to us and our income statement evidently confirms that also. The interest expense of the Group now stands at a much lower level of INR352 million as against INR719 million in the previous quarter.

Going over the segmental performance for this quarter, our Payment Solutions segment constitue with 80% of our revenue in Q1 of FY ’23. This segment includes cash payment solutions, which contributed around 65% of our total revenue. The cash payment solution covers ATM and CRM outsourcing and managed services around this business and the cash renewal service. The rebound in this segment was driven by increase in the transaction, implementation of various guidelines like cassette swap and the RBI guidelines. Digital payment solutions contributed 15% of our total revenue in this segment. It includes revenue from POS acquiring, switching, transaction switching and other ongoing initiatives and businesses like Fastlane.

Our Banking Automation Solutions comprises of sale of cash dispenser, other currency products and technology products, and various services and upgrades related to those businesses. This segment contributed 12% of our total revenue. And our last segment which is Other Automation Solutions segment which encompasses the sale of various segments like retail, petroleum and color machines, and also take care of these services and upgrades of those machines constitute 8% of our total revenue.

With this, we conclude our presentation and we open the floor for further discussion. Thank you.

Questions and Answers:

Operator

Thank you. Ladies and gentlemen we will now begin with the question-and-answer session. The first question is from the line of Nitin Sharma from Mcpro Research. Please go ahead.

Nitin Sharma — Mcpro Research — Analyst

Hi, thanks for taking my call. Congratulations on good set of numbers. I have two questions. First of all can you please talk about how your OMC, POS, KPI has done some update on that?

Saurabh Lal — Chief Financial Officer

Sure. So various KPIs which we basically track within our Company is, as you said, our 80% of revenue comes from Payment Solutions segment, which covers ATM outsourcing and the digital business. So on those front, on the ATM outsourcing, we continue to position ourself as one of the leader in the market, where we are managing more than 32,700 plus ATMs and CRMs on and behalf of various banks. Similarly, if you see from the quarter-on-quarter performance, this number on the CRM side has increased in this quarter as well as by approximately 186 incremental CRMs that we deployed. This number stands now at 4,258 number versus 4,072 number. But on the ATM side, we saw a slight drop in the number of ATM deployment, this is largely because most of the banks are reworking on their strategies for expansion of the branch or expansion of the ATMs at the time of renewal, and they are putting up — and putting more focus on various CRM-type machines. Having said that, if you see on the cost side, we have continued to deploy more POS. We have — our total POS base now stands at 241,064 POS versus 236,588 at the year-end of FY ’22, which means an incremental POS of 4,476 POS machines. And this was again largely driven by the incremental POS of 2,878 POS, which we have deployed for our oil marketing contract with all the three major oil marketing companies. Similarly, if you see, the other KPIs that we track like this after the deployment of these POS machines, the large KPIs that we track is the GTV per POS or GTV overall. So we saw overall increases GTV value also. Our GTV for this quarter stands at INR68 billion versus INR63 billion, which was in the last quarter or I would say sequential quarter. Similarly, the POS GTV which is now stood at INR53 billion which was INR49 billion for the last quarter — last immediate quarter. So these are the few large KPIs that we track from the performance metrics of this business. Similarly, on other two business verticals like Banking Automation Solutions, where we are the OEMs of the machines and we sell those machines, and we run those lifecycle contracts for those machines in the form of AMC revenues and service. That continues to be a very, very consistent performance for us. We have delivered approximately INR500 million of revenue in this quarter itself, even though it’s a first quarter where we have sometimes seen a lower number because of the POs and other orders are in the process of getting finalized. But we have seen a strong performance of that also. Other Automation Solutions, which constitute our three major business segments, which is retail, colors and petroleum, there also we saw service revenue continue to be consistent as compared to what we have delivered in the last financial year or I would say in the last quarter itself. On the product side, we are awaiting certain orders and everything, and we believe that order will continue and it will come over a period of next few quarters, Nitin.

Nitin Sharma — Mcpro Research — Analyst

Where did the GTV on POS for OMC stood, if you can get — give some idea on that?

Saurabh Lal — Chief Financial Officer

GTV per POS you are saying?

Nitin Sharma — Mcpro Research — Analyst

OMC.

Saurabh Lal — Chief Financial Officer

For OMC, the GTV right now stands at INR53 billion as on quarter one of FY ’23, which was INR49 billion in the quarter four of FY ’22. So there has been increase of INR400 crore approximately in the GTV value that we have transacted in the Q1 of FY ’23 versus Q4 of FY ’22.

Nitin Sharma — Mcpro Research — Analyst

Okay, okay. And my second question is that, would you say that this quarter, the POS deployment has slowed on a sequential basis? If it is correct, what caused this?

Saurabh Lal — Chief Financial Officer

So on the POS deployment, we have incremental deployment of around 4,476 POS machines. If I split this into two parts, one is the deployment of POS for the oil marketing company, that stood at 2,878 POS machines. So that POS department continues to grow, but having said that, since the order book that we carried from all these thee oil marketing company, give us a larger visibility to deploy more POS. But considering that as now, we have almost covered 50,000 POS machines in the market, so at the same time, that business and the other teams are strategically looking out for the POS deployment where we should get an incremental values also. So that is how we are now planning our deployments and continue to put the deployment like we have deployed 2,878 POS machines in this quarter, and our incremental GTV for this quarter is also INR400 crores, which is INR4 billion. So if you see the per POS GTV for this quarter is I would say very, very high as compared to overall GTV. So I think the strategy for the Company is to ensure that all the POS machines should get deployed at least one machine at each and every retail outlet so that we should start getting those revenues. And wherever there is a demand for the POS machines, so we are putting up the additional POS machines on a basis of that we should get higher revenues also. So this is what the strategy is. But yes, we have a target to close this contract with the deployment of all theese POS machines, which still gives us the visibility to deploy at least more than 20,000 POS for further those contracts that we have.

Nitin Sharma — Mcpro Research — Analyst

Alright thanks a lot.

Operator

Thank you. The next question is from the line of Sanjay Awatramani from Envision Capital. Please go ahead.

Nitin Sharma — Mcpro Research — Analyst

Yeah. Thank you for giving me this opportunity. Sir, can you tell me what is the current order book which you are holding at this moment for FY ’23?

Saurabh Lal — Chief Financial Officer

With respect to order book, I’ll just take you through the businesses that we have. We have one of the major business is called Payment Solutions business, which covers two businesses, one is from the ATM outsourcing and cash management, and the second one is from the digital business which covers deployment of POS solutions and other acquiring solutions and the Ongo solutions. So from the cash management and ATM management business, the order book basically grows along with the number of ATMs and other deployments that banks and other financial institutions have their strategies in mind. So basis that, we believe we have a strong position in the form of deployment capability and everything. From an order book perspective, generally, it’s running contracts that we have with the banks, wherever the incremental deployment is required, either because of their branch expansion or their corporate relationships or their other incremental deployments or this is the debit card issuance, this is the branch cards and everything. So we continue to get those shares. But having said that, banks have a clear mandate, I will ask Stanley to also further add to this, that banks are aggressively looking for expanding their cash recycler deployment this year and continue do it for subsequent year also, where we’ll see a continuous deployment and growth in the CRM over a period of last one or two years also, and we continue to be part of that journey with the bank. Second one is the cash management business, which is — happen under our subsidiary, Securevalue India Limited. There also, since Securevalue happens to be the company which is compliant with all the regulations and guidelines on all India basis from regulators like RBI and the Ministry of Home Affairs. We continue to garner that market share. We continue to garner the higher profitabilities. Now, over a period of time, we have added over capacity. We have added platform. We are now from an infrastructure perspective, we are fully ready with respect to vaults, vans and everything. And now all the incremental machines that we’re adding on our portfolio is actually helping us to bring or improve our bottom line. So there also, the order book in the form of the contracts that we have with the customers, their deployment strategies and their growth plans, we have continued to be their one of the preferred partners. In case of POS machines, which is largely driven by contracts — definite contracts like OMCs, there we have a very good visibility with respect to the pending deployment of order books that we have like I said in OMCs, we have almost I would say 50% of market share from three oil marketing put together, which gives us the visibility of around 80,000 plus POS machines. We have deployed around 50,000 as of today, so clear visibility of another 20,000 plus or around 30,000 machines can be deployed immediately. And similarly on the Other Solutions, since company is itself developing a lot of Other Solutions, where we are working with the partners to get more visibility with respect to the deployment and the rollout of other distribution. [Speech Overlap]

Sanjay Awatramani — Envision Capital — Analyst

Very helpful. And other thing is, sir, can you provide maybe unit economics of the BLA are operating into that — brown label ATMs?

Saurabh Lal — Chief Financial Officer

Sure. So with respect to the contracts that we have, we run two types of contracts with our bank. One is, which we’re talking about like BLAs in the form of ATMs like a large bank like ICICI, Axis, HDFC. And we have a transaction fee-based contracts with them, so there we charge them on a per transaction fees model and we get paid on per transaction, and then we take care of all end-to-end responsibility for those ATMs. Si those contracts are technically are long-term contracts running into seven-years, eight years. And with respect to the ROCs and IRR, we always look for healthy IRRs in the form of I would say double-digit plus numbers and everything. On a specific unit economics, since the banks are very much different from their approach and their strategies and their payments, so all the banks have a different, different nature of the contracts like some of the off-site ATMs may be priced differently, on-site ATMs are priced differently. Additional ATMs on same site and same branch are priced differently. So dynamics are very much different from all the banks. Maybe we can share with some more details with the help of Shikha and everyone so that you can get more clarity that how does the varies used on networks. Single new deployments will be very difficult to explain how that’s actual, but yes, we get paid for per transactions on ATM. And we have two, three major costs that goes in their ATM, one is the capex cost that machines that we install, second is the rent or lease of the sites that would take on the rent for footing those ATMs. Third is the cost of handling the cash which we call cash management expense. And the fourth one is the electricity expense to run those wherever we have to put that ATM. Rest there other small, small costs like consumers insurance, paper roles, housekeeping and everything, but these are the largely achieved three major costs or four major costs that we have to run those contracts.

Sanjay Awatramani — Envision Capital — Analyst

Yes, sir. This was also very helpful. And last one from my end. Can you give the market share you hold for these two businesses, one is the cash management and the digital business? As you said that we have 50% market share from oil marketing companies that was for the POS machines, right, if I’m not wrong?

Saurabh Lal — Chief Financial Officer

Correct, correct.

Sanjay Awatramani — Envision Capital — Analyst

And from a cash management…

Saurabh Lal — Chief Financial Officer

So on the — as you rightly said, on the POS side, we happens to have a contract from all these three major oil marketing companies, and we are one of the largest deployer of the stall for last financial year. From ATM management and cash management, we continues to be a leader as a second-largest player in the market from both ATM management and the cash management. So that is how our — we position ourselves. From the ATM side also, we continue to be a second-largest player and from cash solution also, we continues to be a second-largest player. From POS deployment on the OMC side, since those are again contract driven, we happens to be one of the largest deployers of the POS machines for the OMC segment.

Sanjay Awatramani — Envision Capital — Analyst

This was very helpful. That is all from my side. Thank you so much and good luck.

Operator

[Operator Instructions]

The next question is from the line of Vignesh Iyer from Sequent Investments. Please go ahead.

Vignesh Iyer — Sequent Investments — Analyst

Congratulations on a good set of numbers. Sir, I just wanted to know regarding our exposure to Sri Lanka, how has it panned out in quarter one, if there is any one-off expenses, or any write-offs coming in this quarter?

Saurabh Lal — Chief Financial Officer

Sure. Thank you, Vignesh. Vignesh, as you know, we as a company, AGS has a presence in other markets like one in the Sri Lanka, so Sri Lanka happens to be one of the critical market for us since we have an ATM deployment over there also. From our contract and from our revenue perspective, we continues to run those contracts from both countries, and we continues to earn those revenues procurement because ATM is one of the critical component of typical activity in those countries as well as just like in India. And our contract is with one of the largest, I would say, bank — one of the largest banks of the Sri Lanka market, and that contract continues to be operate as it is. Most of our expenses are in Sri Lankan rupees and most of our revenues are also in Sri Lankan rupees. So from that perspective, the cost and everything has been taken care. But yes, there are few instances of foreign exchange transfer or I would say certain adjustment has to be done through the financials in order to comply with the various accounting standards where any investment done by our wholly — again holding company to the subsidiary. And if it is not in the form of equity, we have to mark to market that investment since our holding company has given a loan to our subsidiary, so that has been mark to market. And second, there are few payments like we have a technology transfer agreements with some of the partners like we have a switching arrangement with some of our partners. So there we have certain vendor payments, which are — which has to be done in the dollar denomination. So again for that purpose also, we have to do mark to market and do the loss for that purpose. But the major point is coming Vignesh over there is that since the currency has been devalued quite heavily, whenever we do a translation of that revenue to our — say their holding company, which is a Singapore-based company, or when I translate that revenue from Singapore to India, it has a translation loss — as not the loss but yes, revaluation of those revenues, which has been devalued as per currencies. So we have seen a significant reduction in our revenue in the quarter four of last year and some percentage of in quarter one also. But from an overall — from our Company standpoint, from a continue to a business standpoint, from the contract standpoint, we still continues to run those operations and run those contracts.

Vignesh Iyer — Sequent Investments — Analyst

Right. But if I’m not wrong, in quarter four, the currency impact was around INR10 crores to INR12 crores. If you could quantify what it is in current quarter, I mean?

Saurabh Lal — Chief Financial Officer

Yes. For the last quarter, it was INR10 crores to INR12 crores. This quarter, it will be approximately I would say in the range of around INR3 crore to INR4 crore from a currency standpoint of view.

Vignesh Iyer — Sequent Investments — Analyst

Okay. And if I compare traditionally, what would be the percentage of down business that has seen de-growth in Sri Lanka, if you can say like it’s 30% down or 20% downwards what from regular level?

Saurabh Lal — Chief Financial Officer

If you see from the Q4, it was almost 50% down because the currency in Q4 moved from LKR180 to LKR360. It’s a conversion from one USD was used to give LKR180, and it has moved to LKR360 in quarter four. From quarter one, the currency movement is around 360 — dollar to Sri Lankan rupee has moved to around LKR380. So from that perspective, we have seen a reduction in those revenues. But as I said, since our revenues are in Sri Lankan rupees but if you see on an overall contribution of that business to my overall business, out of that 400 or INR4,272 million of revenue that we have reported, approximately INR100 million is only the revenue that we accrue from our full GTSL business approximately. So I think from an overall perspective, this constitutes I would say around 2%, 2.5% of Company’s total revenue. So from a magnitude impact, I think the percentage is very small. But yes, considering the standalone entity that we have, we have a devaluation of currency over there, right? From a business perspective, it has remained stable from overall. other thing which has increased — again since everyone knows, it’s a part of the country where the company goes with a such a high devaluation, we saw an increase in a certain percentage of rate or borrowing rate in that country also.

Vignesh Iyer — Sequent Investments — Analyst

Right. Just confirming. So it was USD1 LKR360 in quarter four, and now it is LKR380, right, in quarter one?

Saurabh Lal — Chief Financial Officer

Yes, approximately.

Vignesh Iyer — Sequent Investments — Analyst

Okay. Okay, right. But sir, coming to again the same thing, value term, these are business around INR60 crore and we’re making around INR17 crore EBITDA. The currency impact itself is INR12 crores. So I mean as things stand, the business doesn’t look much viable, right? Or we can always have a renegotiation as and when the business is done in Indian rupee, so it has to adjust naturally.

Saurabh Lal — Chief Financial Officer

Definitely. Vignesh, I think, yes, since — if I take the last year definitely, we always — everyone was also knew that Sri Lanka and other economies continue to be stable economy. But as you rightly said, since the currency has been devalued substantially, so our business team and other things, the CEO is definitely working with the partners and working with the customers with respect to how this loss can be mitigated and everything. But yes, the discussions are still on the table, nothing has been concluded as well has been finalized as yet between the partners, the customers, the vendors and as the company us. But yes, you rightly said, those points will definitely be taken care in the form of currency devaluations and revaluations when such kind of situation happens, and we will try to work it out in the way that those should be captured in the form of in the agreement itself.

Operator

Thank you. The next question is from the line of Bhavik Dave from Nippon India. Please go ahead.

Bhavik Dave — Nippon India — Analyst

Okay. I hope I’m audible. Sir, just a couple of questions. One is on our ATM management business, just want to understand, there were supposed to be two, three regulatory advantages coming through for us on the cassette swapping and take rates being higher on ATM transactions. Are they flowing through as per the plan? Or have they been delayed because when we see our growth on the ATM management business, that seems to be quite subdued? So I just want to understand how has the benefits played out, or are they delayed by any reason?

Saurabh Lal — Chief Financial Officer

Thank you. Bhavik, with respect to the performance of our ATM outsourcing business, which is largely driven by the ATM contract offering, which you see the overall performance of the Company has increased or overall performance of this business has increased because of two, three one. Definitely, we saw an increase in these transaction trend of the machines that we had in the quarter four versus quarter one, or I would say, quarter one versus quarter one itself. Similarly, we saw increase in our revenue coming from various initiatives from the regulator like with the cassette swap regulations or cassette swap requirement or the various other guidelines of like MHA compliance and everything, and we saw uptake of that. So just to give you on a number perspective, if you see our quarter four performance, our revenue from outsourcing used to be INR1,821 million which has moved to INR2,107 million in this quarter, which is largely driven by all these initiatives and incremental revenue coming from all these business streams. So that — we believe that many of those revenue streams has already come into every, and as a business, wherever we have taken certain internal discussions with the business entity, and we believe that this will continue to grow as more and more banks will continue to increase their penetration on the cassette swap and more and more banks look for providing those services in the form of RBI and MHA compliance. I think both the bodies, CLA body and everybody are slowly and slowly working in coordination with the banks and the RBI with respect to the implementation of these RBI guidelines and MHA guidelines all across the country. And as it continued to grow, we’ll see our increment going further to us, both in the form of AGS Transact Technologies being the MSP for those contracts, and Securevalue, our wholly-owned subsidiary been the implementing company who is going to implement this not only for AGS, but for the various non-AGS customers which Securevalue is servicing right now.

Bhavik Dave — Nippon India — Analyst

Sure, sir. So just this, just following up. When we see our year-on-year total revenue growth, right, 3%, and a large part of our business is the ATM management or the ATM business that we are into, we are growing like setting up the digital payment business, which is now look reasonble part that will obviously get dissolved. But still, the large part of the revenue is the ATM business. And when we look at our overall revenue growth is 3%, if the benefits are coming through, can we expect that the year-on-year growth like going ahead like for FY ’23 or FY ’24 can be double-digit? Or it seems difficult considering maybe the cash withdrawals are lower now and hence, there might be some impact? I’m able to understand why the revenue growth cannot be more than 10% if all these benefits are coming through? Because the first quarter was quite muted on a year-on-year basis, so just wanted to understand that a bit.

Saurabh Lal — Chief Financial Officer

Bhavik, I think — so we started off the quarter I would say very, very strong performance from our internal businesses, how do we look because now, we’re not seeing our business is seasonal in nature, but we always see the quarter performances are slightly subdued with respect to the overall performance of the balance quarter. And definitely, quarter two and quarter three are considered to be very, very healthy quarter because of the nature of business that we have like we have transaction. Fee-based revenue and our income is linked to the transactions and we always see quite a good offtake of transactions happening in quarter two, quarter three, all over the country because of the festive nature and the spending power of the people gets increased in quarter two and quarter three. Having said that, we believe that and I think what Ravi also covered in a statement is that we believe that we will strive for a best year this year from a profitability perspective, and we are working and we are confident that we will definitely have a double-digit growth coming in our overall businesses. But as you rightly said, Bhavik, in Payment Solutions constitute one of the largest part of that growth or I would say part of that our portfolio which constitues approximately 80% of overall business of the Company. So those businesses will continue to grow. It could be deployment of the various initiative, increase in transactions, bank’s requirement of CRMs and operational leverages. And all those factors will definitely help us to improve our profitability, and at the same time, it will definitely help us to grow our top line as well.

Bhavik Dave — Nippon India — Analyst

Sure Sir. Thank you so much.

Operator

Thank you. The next question is from the line of Naveen Jain from Florintree Advisors. Please go ahead.

Naveen Jain — Florintree Advisors — Analyst

Good afternoon Sir. Yeah. Sir, I have a couple of questions, one on your digital business. So this quarter or on a quarter-on-quarter basis, I think there is a marginal decline in revenues in this quarter, whereas our GTV has done fairly even, right, on a quarter-on-quarter basis. So why slight de-growth in the revenue in this quarter versus let’s say 4Q?

Saurabh Lal — Chief Financial Officer

So thank you, Naveen. I mean, we had two major revenues being part of our digital strategy. One is definitely revenue coming from the POS acquiring business, and the second digital revenue comes from the other business verticals that we — which are part of our digital strategy which is the switching solutions and transit solutions that we have. So though the overall revenue is slightly lower than the quarter four I would say from the revenue perspective, but if I distribute or I dissect this revenue two-part, one is a digital POS revenue. So digital POS revenue is around INR463 million for this quarter one, which was INR415 million in the quarter four of last year. So there is a growth in proportion to the growth of our GTV because those revenues are percent-linked to the revenue. As that revenue grow and as automatically might revenue realization also grow. The other businesses where I have a POS deployment and — sorry, not the POS deployment, the switching solutions and the transit solutions that we deploy, we saw this revenue, which was POS231 million in the last quarter of financial year ’22, is at POS150 million in quarter one of FY ’23. So there, few of our contracts, specifically with respect to metro contract has not been executed, I would say not been concluded in this quarter. So where we see that either they got spilled over to the next quarter or since concluded revenue has not come, so we have not accrued those revenues. So on POS side, we see uptake in line with our uptake in the GTV. Other businesses since Q1 either I would say not subdued but Q1 is always a contract — where is the contract only get spilled over to the next quarter, we believe they will deliver those numbers in quarter two and quarter three onwards.

Naveen Jain — Florintree Advisors — Analyst

Understood. Sir, second question on the profitability. So I think the opening remarks, Mr. Goyal mentioned that this year, our profitability on our profit PAT will be highest ever, and I think previous highest that we achieved was in the pre-COVID year of FY ’20, when our profit was around INR83 crores. I mean going by the performance that we have been able to deliver in the first quarter, would it be fair to assume a substantially higher number than INR83 crore, which we have delivered in the FY ’20?

Saurabh Lal — Chief Financial Officer

I think, yes, Ravi has already covered and definitely, we believe this year to be best year for us as we are — all as an organization is targeting. We strongly working towards that and I would say we have been pushed or I would think we have got this — all this thought processes, because of the very strong order book that we run with us, very strong pipeline that we have with us like we see a lot of RFPs coming in the market which gives a lot of boost to our cash in the and ATM in the business. The POS business is also going good. As Ravi also touched upon slightly or not in much detail that we are working on our Ongo strategy, which will get rolled out in the subsequent quarters. So all those initiatives will definitely help us to work on to deliver on the higher revenue output and higher top line. And definitely, the moment within high top line and we — since we are a very large player in this, both the payment space and everying, so we will definitely get advantages in the form of operational leverage and everything which will definitely flow down to a bottom line. So we as a management is definitely confident on working on those numbers, and we have been deliberated internally very, very strongly that we are working I would say in this direction. And I think we are confident that we should or we will have this year as a best year for us.

Naveen Jain — Florintree Advisors — Analyst

Okay, sure. And just finally, on the debt side. So where do you think you’ll end this year at because you know our cash flows are fairly strong, so where do you see the net debt levels by the end of the year?

Saurabh Lal — Chief Financial Officer

So, Naveen from a debt perspective, we stand at around INR6,451 million of net debt as on 30th June 2022. We have a planned repayment for this year. I think from a company strategy point of view, we have estimated in the capex of around INR125 crore to INR150 crore for full year down the line. But having said that, I think the strong cash flows will be generated from the business that we’re targeting and PAT will definitely will be strong. The debt position is a component of that profitability and give us the cash profit. I think the debt level should be — we will be in a very, very comfortable situation at which right now we are, any incremental debt will automatically help us to get incremental revenues since most of the debts are supported by the contract that we have with the bank in the form of deployment of ATMs or in the form of the deployment POS machines or in the form of deployment of vehicles for our Securevalue business. So I think the debt situation should be in the similar range that which we are right now. It will not grow given those numbers.

Naveen Jain — Florintree Advisors — Analyst

Sure Sir. Thank you so much.

Operator

Thank you. The next question is from the line of Amit Chandra from HDFC Securities. Please go ahead.

Amit Chandra — HDFC Securities — Analyst

Sir thanks for the opportunity. Yeah. Sir, my first question is on the addition of CRM. So we have added around 186 CRMs in the quarter. So if you can state the — in terms of full year, what is the perspective additions in terms of number of CRMs? And also in terms of the ATM business, now we have seen increase in the fixed-fee contract side. So are we strategically shifting towards more fixed fee contracts versus transaction fee-based, and is it the reason for increase in margins?

Saurabh Lal — Chief Financial Officer

Thank you, Amit. Amit, from — definitely, we can club it questions together in the form of the strategy. The business is right now running in the — so this is ATM business. Most of the banks where the machines are getting deployed, whether it’s ATM machines or the CRM machines. So a bank also, I think internally is, working on a model where they want to make sure that these CRM machines are installed at all of their branch network, and it helps them to automate this process. By automating the process, banks are endevoring and banks are I think upgrading and discussing with their IT to ensure that these machines can perform both the function together. As the machine says it’s a cash recycler machine, CRM, so they have the functionality to perform both the actions where they can dispense in currency also and they can accept the currency also. So it gives us this visibility of hold withdrawal also and deposit to us. Wherever we are getting those confirmations and there we are discussing with the banks that machines can be used for both cash withdrawal and deposits, we and banks, both are working on a transaction fee-based model as well. But wherever those machines are installed as independent machines for depositing the cash only and still not been used for withdrawal purpose, we are mostly entering into a fixed fee contract with those banks. So from a CRM perspective, I think the moment these machines become active for both type of transactions which withdrawal and deposit, we can definitely know that withdrawals number for the — we see our history and the current trend, and with the digital deposit transactions, we can work it out. But if the machines is only utilized for depositing purpose, we are right now only working with a fixed fee contract with the banks. Similarly, banks are also at the same time whenever the ATMs, as you rightly said, the transactions right now which ATMs working still not covers the pre-COVID level. So wherever the new contracts are coming only for the ATMs, we are evaluating both the option to go with a fixed fee contract or a transaction contract. But yes, the strategy is to work on the contract where it’s become IRR immediately positive by. it cannot be a fixed-fee contract. It can be hybrid of fixed and mix where we get the minimum guarantee of transactions so that our P&L does not get bled for that purpose. And at the same time, it gives us the upside in the form of transactions whenever the transactions come back or certain pockets are certain locations that transactions move back.

Amit Chandra — HDFC Securities — Analyst

Okay. And sir, in the transaction-based ATMs, you said that there has been an improvement in the number of transactions per ATM per day. So if you can quantify like what is the average transactions happening at ATMs? And also in terms of realization, have we seen improvement in realizations also there? Thanks.

Saurabh Lal — Chief Financial Officer

Sure. So, Amit, if you see on an overall basis of the industry also, here you’ll see if I take you through the what we have started discussing on the transaction definitely, from the pre-COVID period still up till now. On an overall industry-wise, the pre-COVID level, the transactions happens to be around INR66 crore transactions or transacted on per — on the ATMs on a monthly basis. When we reached out to March ’21 which was end of wave one and almost closure of wave one, we saw the transactional back to 60 crore transactions. But unfortunately, we had that COVID wave two which resulted in the reduction of transactions to again back to 54 crore, 55 crore level. The last data that we have been tracking and even that’s working is that March ’22 or May ’22, ith the transactions are almost back at 59 crores and 58 crores around. So the transactions are again coming back to 58 crores, 59 crores, but yes, it has still not crossed the pre-COVID level. So our portfolio is also in the similar direction where we saw that almost 85% to 90% of the transactions have come back, but yes, there is still definitely, a way to improve it. So that is how us — that is Stanley who heads this business and our internal management is working on to have more and more deployment of the CRM, which gives us the additional revenue in the form of deposit transaction, deploy and complete cassettes swap or other MSA guidelines which gives the additional scope of revenue to both, AGS and Securevalue as well, or have a contract with the bank, which have a fixed fee contract so that we are not impacted by ups and down of those transactions as well.

Operator

Thank you. The next question is from the line of Deepak Poddar from Sapphire Capital. Please go ahead.

Deepak Poddar — Sapphire Capital — Analyst

Yeah. Thank you very much for the opportunity. Sir, I just wanted to understand, first on the interest front. So how do we see interest cost this year overall?

Saurabh Lal — Chief Financial Officer

So there has been Deepak significant reduction in the interest cost of the Company. Our interest cost used to be 71. If I take it from the quarter-on-quarter basis, the last quarter, we saw the total interest cost was INR719 million in quarter four. The interest cost or finance cost for this quarter of the Group was INR315 million — INR351 million, so almost we saw a 50% plus reduction. These numbers, I’m talking about taking care of the Ind AS interest cost, which is a lease cost for both the — from the lease cost effective taken into account all these factors. So we believe that our interest cost for this quarter considering that our debt level will be in the similar range that we have right now, so our interest cost for this year will be approximately I would say INR1,400 million around considering that Q1 as a base year for interest purpose, maybe plus or minus 1% or 2% from here.

Deepak Poddar — Sapphire Capital — Analyst

Okay, understood. So, it includes the benefit of that INR100 crores that we have been talking about, right, I mean?

Saurabh Lal — Chief Financial Officer

Correct, correct. So if you see our overall finance cost for last financial year, which was FY ’22 was INR2,500 million, and considering that current run rate, we are targeting the total borrowing cost, including this Ind AS, in fact, is INR1,400 million. So there is a complete reduction of INR1,100 million on an overall interest cost basis. But Deepak, you have to accept that there is a possibility that some percentage of rate hike is happening in the market, some has been forwarded and transport by banks to us, we may be waiting on giving us. I’m sure that’s a macro factor which everyone has to take it into account

Deepak Poddar — Sapphire Capital — Analyst

Fair enough. I understood. That is it from my side. Thank you very much.

Operator

Thank you. The next question is from the line of Avadhooot Joshi from New Berry Capital. Please go ahead.

Avadhooot Joshi — New Berry Capital — Analyst

Hi. Good afternoon. Thanks for the opportunity. I have two questions. First on the ESOP cost. So if we look at for the FY ’22, ESOP cost was around INR11.3 crores, and for the Q1, ESOP cost is INR3.2 crore. So I want to know how is the trajectory going for the ESOP cost? That’s all.

Saurabh Lal — Chief Financial Officer

Sure, Mr. Joshi. So from an ESOP perspective, Company issued the new ESOP scheme for their employees in the month of August 2022, last year — sorry, my bad, 2021. So this is that since our ESOP options were technically available for three years of investing, so by applying that basis average cost method, we had that cost of 3X6 in the first year, 2X6 in the second year, and 1X6 into third year. So that is how it has been quickly weighted over the period of the resting period. So that is all the cost of INR11.2 crore was recognized for the last financial year. And this year, as we see the first quarter is INR3.2 crore here, but for this year, the total overall cost will be in the range of around INR8.5 crore on an annualized basis.

Avadhooot Joshi — New Berry Capital — Analyst

So, in the next quarter you are expected to go down further?

Saurabh Lal — Chief Financial Officer

Go down, yes.

Avadhooot Joshi — New Berry Capital — Analyst

And what would be the quantum for the next quarter then?

Saurabh Lal — Chief Financial Officer

So as I said, Mr. Joshi, since these ESOPs were issued in the August ’21, so from August ’21 till next year August 2022, the cost is approximately this. So I would say one-third 3X6 or approximately in the similar range of I would say, the cost would be around — if the quarter two will be around the similar range, I think from the quarter three or quarter four perspective, there will be a definitely reduction in the cost. As I said, we issued in the month of August ’21, August ’21 till August ’22, we have a first year of resting, which will be a weighted average of 3X6 basically, in half of the cost will get accrued in the year one, then in the year two, it will be 2X6 which is one-third, and then in the third, it will be 1X4.

Avadhooot Joshi — New Berry Capital — Analyst

Understood. And second question is on petroleum outlets. So just wanted to know how many outlets we have added, and what’s the plan for this year to add the petroleum outlet?

Saurabh Lal — Chief Financial Officer

So overall, for POS deployment for the — along I’m talking about the POS deployment, Mr. Joshi, [Indecipherable] So on an overall basis, we have deployed approximately around 49,000 plus POS machines at the retail outlet. The order book that we have gave us the visibility of approximately 80,000 plus POS deployments in the market. So our endeavor is to close this deployment at the earliest. But I think at the same time, what management is doing and what the business is right now focusing on to ensure that we should have at least one POS deployment at every retail outlet that we own so that we start getting those numbers and we start moving those retail outlets to those POS machines. And at the same time, wherever we have done the POS deployment for business, we are running this business for almost three years now. We have started analyzing those GTV values of POS for per retail outlet, and wherever we need to re-strategies with respect to the further deployment, put more POS machines, so that the volume increase, how much percentage of our revenue is routed through those POS machines, how much is cash and everything, and at the some time, we are educating them to and encouraging them to put on more and more POS machines. So both the things are now happening parallelly, but as I said, out of 80,000, still 60,000 has been launched. The larger deployment has already been done, but at the same time, we are working towards the closing the pending deployment also, so that we can get the maximum benefit out of those contracts and we can leverage those POS points that we have built for various other value-added services which we have rolled out or which we have planned to roll out on those POS machines.

Avadhooot Joshi — New Berry Capital — Analyst

Okay. So 30,000 remaining, you expect it based on the data analytics, whichever is having better performance, then you will decide where to deploy it in this year itself. Is that the correct understanding?

Saurabh Lal — Chief Financial Officer

Yes.

Avadhooot Joshi — New Berry Capital — Analyst

Okay understood. Thank you. That’s it from my side.

Operator

Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for their closing comments.

Ravi Goyal — Chairman and Manager Director

Thank you, everyone, for joining us today on the earnings call. We appreciate your interest in AGS Transact Technologies Limited. If you have any further queries, please contact SGA, our Investor Relations advisors. Thank you so much.

Saurabh Lal — Chief Financial Officer

Thank you everyone.

Operator

[Operator Closing Remarks]

Duration: ?? minutes