Radiant Cash Management Services Limited
9,259words
113turns
12analyst exchanges
3executives
Management on call
T.V. Venkataramanan
CHIEF FINANCIAL OFFICER
Sohail Halai
ANTIQUE STOCK BROKING LIMITED
Key numbers — 40 extracted
70%
cash management space. We have established a strong presence in the market covering approximately 70% of the total PIN codes and servicing around 64000 retail outlets. Our PAN India network is deeply
81%
N India network is deeply entrenched in tier 3 and tier 4 cities, where we get into approximately 81% of the country's population. 2/3rds of our retail touch points and 53% of our revenues come from
53%
e get into approximately 81% of the country's population. 2/3rds of our retail touch points and 53% of our revenues come from the tier 3 plus cities reflecting our strategic focus on this high pote
2%
segment. Business model is leverage to growing retail market footprint. We currently service the 2% of the addressable retail outlets in the entire country with levers with a massive untapped marke
12.7%
ade a stable start to the year in what is a slow quarter for our business. Revenues have grown by 12.7% to reach Rs.950.9 million. Our EBITDA margins have also remained strong at 21.6%. This performanc
Rs.950.9 million
art to the year in what is a slow quarter for our business. Revenues have grown by 12.7% to reach Rs.950.9 million. Our EBITDA margins have also remained strong at 21.6%. This performance validates our ability to
21.6%
es have grown by 12.7% to reach Rs.950.9 million. Our EBITDA margins have also remained strong at 21.6%. This performance validates our ability to capitalize on our market positioning effectively. I al
950.9 million
t business. Coming to the financial performance for the quarter. Total income for Q1 FY2024 was 950.9 million, representing a 12.7% growth on year-on-year basis. I would like to highlight here that Q1 FY2023
41%
s. I would like to highlight here that Q1 FY2023 had a strong bounce back from COVID representing 41% growth over Q1 FY2022. The base effect of this and the fact that Q1 has been traditionally a weak
25.9%
this performance. The EBITDA margins for Q1 FY2024 stood at 21.6% as compared to 25.9% in Q1 FY2023 representing a drop of 420 basis points year- on-year. The drop in margin is on accou
420 basis point
Q1 FY2024 stood at 21.6% as compared to 25.9% in Q1 FY2023 representing a drop of 420 basis points year- on-year. The drop in margin is on account of the following three aspects. A) Increase in
14%
d gunmen are incurred up front for this period. Three, the cash executive costs have increased by 14%, comprising 7% increase in count and a 7% increase in cost for CE. As the revenue growth is less
Guidance — 20 items
“These are routine in nature and we expect past trends to our growth in net additions to continue in feature.”
“We see this vertical as an important driver of growth in the medium-term.”
“So we expect the momentum of growth to continue and this segment will grow at higher than average levels over the next two, three quarters.”
“We have strengthen the team here and expect this segments to outpace other verticals steadily over the coming quarters.”
“With the new initiatives highlighted by CMD in his opening remarks, we see FY2024 sharing with this another year where we will deliver strong revenue and earnings growth as well as building new long- term levers for growth.”
“That continues to keep giving us more points, and third is where we have our own direct contract with end customers and offer this as a direct service and that is also robustly growing as I said today, 4.1% of our revenues are direct customers and we expect that to continue more and more.”
“And related question is how do you plan to add more bank clients?”
“We expect that wave also to continue to come in the next medium-term, which will continue to provide growth, which is that as I said, direct customers also will provide growth for us.”
“But that is routine in nature, we expect the trend line to continue, and as it is first quarter is a little lower season quarter for us every year.”
“We expect it to probably restore in the next two or three quarters.”
Risks & concerns — 11 flagged
The base effect of this and the fact that Q1 has been traditionally a weak quarter is reflected in this performance.
— Muthuraman
In terms of end customer segment analysis, the petroleum sector, which saw a slowdown in FY2023, has recovered to some extent during the quarter though the current levels are lower than March 2022 levels by well over 30%.
— Muthuraman
I am very happy to inform that there was zero cash loss incurred during the first quarter, thanks to our robust risk management system.
— Muthuraman
One is other than Radiant and CMS Info Systems, are the other players like Brinks adding the points in the retail cash management, and how easy or difficult is it to add points.
— Vikas Kasturi
David Devasahayam: I will take the question as to how easy or difficult it is to add points.
— Vikas Kasturi
So it is a marginal impact of that on the profitability.
— Venkataramanan
So difficult to put out numbers depending on how the business scales up, we may have wide variation.
— Muthuraman
Are we facing these pricing pressure from our clients for cash pickup and delivery?
— Aditya Pal
So with regards to your question it is an enormous opportunity and therefore there is no question of the competitive pressure coming onto us in anyway the opportunity since is very large and the other aspect with regards to the last five quarters I will ask Muthu to get in and answer your question.
— Mukul Garg
So I do not see any challenge to meeting those targets.
— Muthuraman
How do you kind of see the trajectory of investments is that something which will kind of see going forward also or this was more of a reactionary impact because of the slowdown in the business and hence you had to undertake these investments despite margins impact being an adverse event in the near-term?
— Mukul Garg
Q&A — 12 exchanges
Q
Good morning, Sir, and first of all, I would like to congratulate the entire team of Radiant Cash Management for creating this wonderful business. I had a few questions regarding the business part of it. One is other than Radiant and CMS Info Systems, are the other players like Brinks adding the points in the retail cash management, and how easy or difficult is it to add points. Col. David Devasahayam: I will take the question as to how easy or difficult it is to add points. The essence of retail cash management is that network that you have? Now, as I said that we are present. In over 70% of
Muthuraman
I just like to add a couple of points to this. Our point additions come from three multiple sources. One is that many of our existing clients continue to expand. As they expand that additional points will come to the existing service providers, so a good part of our growth comes from those existing end customers. To take that Amazon or you take the reliance Petroleum or you take Reliance Retail or you take more retail or any of these customers. They will all have their own growth plans as the end customers grow that additional points coming. The second stage is that, the service is an extremel
Q
Thank you so much for the opportunity. This question might have been answered before, but what I wanted to understand is why the revenue has been muted this quarter?
Muthuraman
I addressed this part. As you can see, 12.7% total income growth is little misleading because we had a base effect of last year where there is a 41% growth. So that is one part. The second is that we have not yet fully recovered the full growth on the petroleum sector. It is still lower, almost 30% lower than our March 2022 level, and we do took some tough call on rationalization of some of the points because of inactivity and the root level profitability. But that is routine in nature, we expect the trend line to continue, and as it is first quarter is a little lower season quarter for us eve
Q
Thanks for the opportunity. My first question is regarding, So as you mentioned that some of the new age banks have started providing the retail cash management and PSU's are yet to come so recently some of the midsize PSU banks are also indicating that they wanted to start this business, this service. So are you seeing any tenders being floated from the midsize PSU banks? Col. David Devasahayam: This for your information, with all the major PSU banks we already have and agreement is in place. So the agreement has already been done. But excepting the largest PSU bank, the others have still not
Dixit Doshi
So we had registered with them and we have the agreement, it is just the volumes are very low right now. Col. David Devasahayam: Absolutely right. Yes. Second question was in terms of touch point. So as you know earlier you were mentioning that we plan to expand the thousand touch points per month and at a gross level we have done it, but at net level it is low. So net, net what kind of touch point addition we can expect annually. Col. David Devasahayam: Touch point for us we are still focused on a 1000 to 1200 points per month, but now having listed we are looking back, we are actually doing
Q
Thank you for the opportunity. I just wanted to understand more about the investment into the Bullion space. So you quantified it saying that around 4 Crores would be invested in the first year of operations. So is this more of a capital expenditure and what would this foreshore entail?
Venkataramanan
This will not be in capital expenditure; this will be mainly for investments in rental deposits for buildings and deposits for airlines etc. There will not be any capital expenditure in this regard. And with respect to the year-on-year growth in other expenses, you had given two to three reasons. Would you be able to quantify what percentage of the 9.5 Crores jump is with respect to the new segment that is the entry into Bullion Segment. See individually, as I said that the employee cost data is there in the website that the disclosure itself. There is almost I think out of that 4.2% drop abou
Q
Thanks for the opportunity. I have few questions. First with respect to the newly sorted business. I just wanted to know what would be the quarterly run rate of expenses for this newly started business, let us say break it up between employee and other expenses?
Muthuraman
We have not given guidance on individual segment level. It is a very nascent business. So difficult to put out numbers depending on how the business scales up, we may have wide variation. We have not given specific guidance on that individual vertical question. In Q1, how much was that in Q1? 125 people is the strength that they we have added in that segment and I am sure you can get the sense on average cost per employee from the data that we have already have there. Can you elaborate on the economics of this business, let us say margin profile and there would be already existing players who
Q
Thanks for the opportunity. Quickly I wanted to ask on the same question that the previous participant had asked. Are we facing these pricing pressure from our clients for cash pickup and delivery?
Muthuraman
No, not really. Just now I read out this thing. Per point, per month, my realization has only increased. No, because even when I do price per pickup point. I actually see a dip on that side as well. That is why this question came. No, if you see only cash pickup, that number is 3223 versus 3199 very small 1% drop could be even because of us removing some of those lower value added points, etc. But cash pickup plus network cash management is a better metric to see what is the effectiveness of per point that has only increased from 4066 to 4096. How much did we do in network cash management this
Q
Thanks for the opportunity. This is actually an industry question. we saw recently Hitachi payment acquire right as cash management business, and Hitech playing that across into cash pickup and ATM cash replacement with 40000 touch points comprising ATMs and retail outlets across 25 states. Any contours on the deal and what its reflection on the industry. If you could share, because we do not know the financial that are happening at.
Muthuraman
We are aware with the fact that right we have been in the market for a longtime and now we read about that Hitachi acquisitions but we do not have any further details on that as of now. So as it is one of the big player in retail cash management. Hitachi is mainly into ATMs right sir.? Col. David Devasahayam:Yes. Hitachi essentially is in the MSPs. We are finding that the MSPs are getting a captive player like to have their own facility for focusing on their ATM service clients. So I have a feeling that they will largely now move into that segment in a more focused manner. Thank you.
Q
Thank you for the opportunity. My question largely pertains to our new segment of DVJs. So we have as of now we serve around 13718 pin codes and about 65000 touch points. Of this what percentage of pin codes and touch points do you see having the potential for this new business line? Thank you. Col. David Devasahayam:I think the entire ambit of whatever Jewelers and outlets are there, they all will fall within for existing routes and service lines that we have already established excepting a few which may be in the extreme tier 4, tier 5 locations otherwise everybody else will fall within the
Shrish Vaze
My second question is primarily about the customer profile for this segment. Would it be largely a large organized Jewelers or do you also see smaller standalone Jewelers sort of using this service. Col. David Devasahayam:Well at this point we are agnostic to the size of the Jeweler we have separate understanding or we have separate arrangements of small Jewelers who can be more like walk-in if suppose you require a service and they require that support we are in a position to provide that for them. Then the other medium level market where we have tied up with suitable agreements with all of t
Q
I have two questions. First is that now with the addition of the new Diamonds and Billion vertical from Q3. What kind of growth are we expecting in the revenue for the whole year, and secondly on the margins front is the new vertical we start fully from Q3 can we expect that the margins will remain subdued for Q2 as well and since you had also guided that there will be an improvement in margins on a nine month basis. So does that come now.
Muthuraman
Sorry your voice is little muffled, can you speak little away from phone. Sir the first question is now with the addition of the new Diamond and Bullions vertical from Q3 what kind of growth in revenue are we expecting in FY2024 and secondly on the margins front are they expected to remain subdued for Q2 as well because the new vertical is expected to start fully from Q3. First question I think it is a blue sky of opportunity I think that the industry size is and in fact the Diamond, Bullion, Jewelry, industry size is in fact bigger than RCMS fiscal and almost 60% - 70% of our segment is unorg
Q
Col. Two quick questions from you and then one from Muthu. Are you still seeing the kind of elevated competitive pressure in the space you have alluded to in past rest was seeing some competitive pricing going on which is kind of impacting profitability for you guys, and secondly if you look at the Y-o-Y growth over last five quarters growth has been constantly moderating down qualitatively how should we see growth recovery play out is that something which will end up more of a second half phenomena given that we do not have kind of control over what is happening at petroleum end and hence thi
Muthuraman
Yes, the petroleum was in a sense had taken off and our growth in the last three plus quarters it is improving steadily but as I said in my initial thing, we are still 30% shot of what we were in March 2022 on this segment alone. So which means that there is significant and it is steadily improving so to that extent this segment will grow at a faster phase than the industry as the company as a whole. We are getting reasonably big on direct sales which has actually if you see in quarter-on-quarter it is tripled on a very small base but still tripled today it is 4% we expect that share of direct
Q
Thanks for the opportunity. Sir, my question is on your growth. If you can help us understand the percentage of growth is coming from existing customers and vis-à-vis new customers? New customer addition.
Muthuraman
As I said the new customer additions a good part of it is actually from direct customers. So there we have seen a good growth year-on-year. But still that numbers are still very small. A substantial portion of our growth is coming from and will continue to come from our existing clients. In terms of end customers, both existing end customers as well as new end customers. So we have added fairly a decent number of end customers if you see in this quarter as well, so 43 new end customers. So that should provide us the second layer of growth. My next question is on the same line. See if your exis
Q
Yes, Thank You. Thank you Colonel, Sir and team for sharing valuable time with us to explain the quarter and the future outlook. We wish you all the best for the quarters ahead, and finally would like to hand over the call to Colonel Sir for his closing remarks. Sir if you want to add any closing remarks. Col. David Devasahayam: Well, thank you very much Sohail. It has been a very interesting session and from great questions that were asked today and I can only hope that we could put some silly answer of these questions. Only can feel that as investors you can be assured that we are well posit
Opening remarks
Sohail Halai
Thank you. I welcome you all to 1Q FY2024 earnings call of Radiant Cash Management Services and thanks to Colonel Sir, and team for giving us this opportunity to host the call. Let me introduce the team. Today we have with us Mr. Col. David, CMD, Mr. Venkataramanan, CFO, Col. Benz Jacob, Director, Operations, and Mr. Muthuraman, Director, Strategy and Investor Relations. Without further delay, let me hand over the call to Col. Sir, for his opening remarks. Over to you, Sir. Col. David Devasahayam: Good morning and thank you very much Sohail for the introduction and having organized this. Good morning, ladies and gentlemen. Thank you for joining us today for Radiant’s investor call. I am pleased to share with you some exciting updates about our company's performance and our vision for the future. Radiant as you all know is a leading cash logistics company operating predominantly in the retail cash management space. We have established a strong presence in the market covering approximate
Muthuraman
Thank you Colonel. Good morning, everyone. Thank you for joining us on this investor call today. I am pleased to share with you latest update on our company’s financial performance and KPI for this quarter. Our extensive presence spans over 13700 pin codes across 6200 plus locations, giving us a unique competitive advantage. This vast network allows us to efficiently serve a large number of clients. We continue to grow the network which enables us to further entrant ourselves in the retail cash management business. Coming to the financial performance for the quarter. Total income for Q1 FY2024 was 950.9 million, representing a 12.7% growth on year-on-year basis. I would like to highlight here that Q1 FY2023 had a strong bounce back from COVID representing 41% growth over Q1 FY2022. The base effect of this and the fact that Q1 has been traditionally a weak quarter is reflected in this performance. The EBITDA margins for Q1 FY2024 stood at 21.6% as compared to 25.9% in Q1 FY2023 represen