Manipal Technologies (MTL) Seeks Strategic Investment For Growth, Looks To Raise Rs 1000 Crore; Insights Into The Global Smart Card Market

Manipal Technologies (MTL), India’s leading manufacturer of banking and smart cards, is seeking to raise Rs 1,000 crore ($100-125 million) through a strategic financial partnership. 

The Pai family, who has owned the business for eight decades, aims to bring in an external investor at a valuation ranging between ₹4,000-4,200 crore ($500 million). 

The Manipal Group originated as the back office of Syndicate Bank in 1941 and is now looking to diversify and expand its operations.

The financial move will initially provide an exit for some minority shareholders, specifically family members holding about a 20% stake in the parent company MTL. 

Apart from the secondary stake sale, an additional 5-10% primary shareholding is expected to be sold to support the company’s expansion plans. According to reliable sources, Rothschild has been appointed as the investment bank to manage the stake sale process, and several private equity funds have been approached.

MTL engages in various business activities, including printing, secure transactions, marketing, branding, and communication for consumer-oriented industries such as retail banking, telecom, education, publishing, consumer goods, financial services, aviation, and transport.

The company also manages government business and has more than two decades of experience in the security data printing sector.

Gautham Pai, the executive chairman of MTL, leads the company’s operations. MTL, with a consolidated revenue of Rs 1,900 crore in FY23, witnessed a significant contribution from the trading and manufacturing of cards. 

As reported by India Ratings Research, the consolidated EBITDA margins increased to approximately 12% in FY23 to Rs 230 crore.

MTL’s subsidiary, MCT Cards & Technology, is a crucial component of the company’s revenue and is certified by prominent entities such as Visa, MasterCard, RuPay, Diners, SCOSTA, and PCI DSS.

The consolidated revenue profile is diverse, with secured printing and stationery businesses constituting 46%, plastic and metal cards at 34%, and financial inclusion at 11%, while the remainder is attributed to the packaging business segment.

In FY22, the top 10 clients accounted for 50% of the total revenues, according to a report from Infomerics Ratings.

Manipal Technologies Limited (MTL) is a prominent player in India’s business sector, particularly in secure transactions, printing, and technology solutions. 

Established in 1941 as the back office of Syndicate Bank, MTL has evolved into the country’s largest manufacturer of banking and smart cards.

Insights into the Global Smart Card Market

The global smart card market is poised for substantial growth, with recent research projecting revenues to reach USD 11.40 billion by the end of 2023.

The market is anticipated to surge to approximately USD 19.85 billion by 2033, with a robust Compound Annual Growth Rate (CAGR) of 5.7% expected between 2023 and 2033.

Market Dynamics

The smart card market is characterized by its rapid expansion, driven by the widespread adoption of card-based technologies facilitating secure and efficient transactions. 

These smart cards find applications across diverse sectors, such as banking, transportation, identification, and access control. 

Some key drivers of this growth include the increasing acceptance of contactless payment systems, rising demand for secure and efficient payment solutions, and government initiatives endorsing the use of smart cards.

Rising Demand and Growth

The heightened adoption of contactless payment systems and the growing need for secure payment solutions are key factors propelling the market forward. 

Additionally, the healthcare sector’s increasing demand for smart cards and the surging popularity of mobile payment systems contribute significantly to the market’s expansion. 

Industries like healthcare, transport, BFSI, and others widely utilize smart cards due to their privacy and confidentiality features.

Market Trends

The smart card market is witnessing a shift towards the adoption of advanced technologies, including biometric authentication and cloud-based solutions. 

Manufacturers are focusing on developing more secure and efficient payment solutions such as contactless payment cards, mobile payment solutions, and wearable payment devices.

Regional Snapshot

Asia Pacific is set to be the fastest-growing smart card market, driven by rapid industrialization, urbanization, and the flourishing e-commerce sector in countries like China, India, and Japan. 

North America and Europe will hold a significant portion of the global market, while South America is expected to experience rapid growth due to increased consumer spending via digital media. 

The Middle East and Africa are also poised for substantial smart card market growth, driven by the adoption of advanced technologies.

Drivers and Impact of COVID-19

Smart card market growth drivers include the rising adoption of contactless payment systems, demand for secure payment solutions, and government initiatives promoting smart card usage. 

The COVID-19 pandemic further fueled demand for contactless payments, with consumers perceiving tap-and-pay cards as the most secure and convenient method. 

The Last Bit, As the global smart card market continues to evolve, driven by technological advancements and changing consumer preferences, it presents significant growth potential. 

The confluence of secure payment solutions, innovative technologies, and regional market dynamics positions smart cards as integral components in shaping the future of digital transactions.