CMSINFO - CMS Info Systems Limited Share Price

Management outlined a positive outlook, emphasizing steady growth and strategic initiatives:

• Revenue & Margins: Achieved 10% revenue and 7% PAT growth for 9M FY25, driven by market share gains in Cash Logistics (42% share) and margin expansion via tech/automation investments.
• Order Book & Execution: MS&T secured orders exceeding Rs.700 crore (mostly recurring). Delays in a large PSU order (Rs.1,900+ crore) shifted ~Rs.150 crore revenue to FY26, with 60% execution targeted by Q4 FY25.
• Medium-Term Growth:
  • Cash Logistics: 10-13% CAGR, supported by ATM outsourcing (potential interchange fee hikes) and retail expansion (15% YTD growth).
  • MS&T: 15%+ growth, leveraging AIoT/remote monitoring (e.g., quick commerce win) and software solutions.
  • Bullion Logistics: Emerging vertical with synergies from existing networks.
• Regulatory & Market Shifts: RBI's cassette swap rollout (25% done, expanding to 80 cities) and competitor disruptions offering client transition opportunities.
• Expansion: Retail focus and non-BFSI entry (e.g., AIoT in quick commerce) to diversify revenue.
• M&A & Capital: Active pipeline in B2B payments, tech, and logistics, with a focus on accretive deals. Strong balance sheet (zero debt) supports organic/inorganic growth.
• Outlook: FY26 services revenue rebound (15%+), mid-term 13-15% CAGR. Investor Day planned post-FY25 to detail strategies.

Key drivers include retail momentum, ATM outsourcing trends, and cross-selling tech solutions across sectors.

Question 1:
Balaji Subramanian (IIFL Capital Services): While you have talked about 13% to 15% revenue CAGR going forward, is there any guidance that you would like to provide for the next 4 years, like how you had guided for doubling of revenue between FY '21 and FY '25? My second question is, with the issues faced by one of your competitors, how do you see the market dynamics changing in the short term as well as the medium term? And would you be interested in acquiring parts of their business?

Answer:
Rajiv Kaul deferred specific guidance to the upcoming Investor Day, noting that market dynamics remain fluid due to external factors and competitor disruptions. He highlighted that customers are shifting business to stronger players like CMS, creating growth opportunities. Acquisitions in core business lines would be considered if accretive and strategic, but no active discussions are underway.

Question 2:
Prithvish Uppal (Elara Securities): First, on order book execution delays: what progress has been made, and what gives confidence in achieving 60% execution by Q4? Second, what drove the margin improvement in the Cards business, and is it sustainable? Third, why did ATM/CIT growth lag despite retail cash logistics growing 15%?

Answer:
Order execution delays stemmed from extended testing cycles and handover delays. Progress improved from 15% (H1) to 30% (Q3), with momentum expected to drive 60% by Q4. Cards margins rebounded to ~20% post-cost normalization. Retail growth (15%) offset flat ATM/CIT trends due to external factors, though ATM/CIT volumes improved in Q3/Q4.

Question 3:
Prithvish Uppal (Elara Securities): On the AIoT quick commerce win: Is this a cross-sell? What is the margin/ROCE profile for AIoT?

Answer:
The AIoT win is a cross-sell with a retail cash logistics client. Margin profiles for AIoT are accretive, with blended MS segment margins at 17.9% (higher for services vs. products). IRRs typically range 18"“25%, with scalability and SaaS-like recurring revenue models driving profitability.

Question 4:
Nitish Rege (Chrys Capital): Can the MS segment achieve 43% Q4 growth to meet guidance? What is the size of the quick commerce AIoT order?

Answer:
MS revenue guidance was revised downward due to order execution delays (INR 150 crore impact). The quick commerce order size was undisclosed, but execution focus remains on scaling AIoT deployments.

Question 5:
Baidik Sarkar (Unifi Capital): How is competitor disruption translating to commercial opportunities? What is the run rate for gold/bullion and loan collection businesses?

Answer:
Disruption has spurred private bank engagements, shifting contracts to fixed-fee models. Execution delays persist but present midterm opportunities. Bullion logistics is growing organically, while loan collection is paused pending sector stability; M&A is under evaluation.

Question 6:
Jatin Parashar (Parashar Estates): How will ATM reductions by banks impact CMS? What revenue/margin contribution can virtual security and bullion logistics provide?

Answer:
ATM outsourcing remains a growth driver (3"“4% annual expansion). Cassette swaps and PSU bank RFPs (e.g., 10,000 ATM outsourcing) will offset reductions. Bullion margins align with CMS's core business; virtual security (AIoT) is margin-accretive but not quantified.

Question 7:
Aasim Bharde (DAM Capital): Are order execution delays the "new normal"? Will FY'26 see stronger MS growth? What is the CAPEX split?

Answer:
Delays are situational (election cycles, testing). FY'26 growth should improve as delayed orders normalize. CAPEX (INR 150"“200 crore for FY25) prioritizes MS order execution (60% by Q4) and tech/RMS expansion.

Question 8:
Shivam Parakh (ValueWise): Why do bad debts persist? Are they customer-specific?

Answer:
Bad debts (4% of revenue) reflect industry-standard reconciliation delays, not credit risk. Risks (cash pilferage, SLA penalties) are insured but adjusted against revenue. Tech improvements and process streamlining aim to reduce this further.

Question 9:
Akshat Bairathi (RSPN Ventures): Why did MS revenue dip sequentially despite order execution progress?

Answer:
MS revenue dipped due to product lumpiness (banking automation), but services grew. Recurring revenue (85% target for FY26) from AIoT and managed services will stabilize growth.