CMSINFONSEJuly 29, 2025

CMS Info Systems Limited

11,357words
86turns
11analyst exchanges
5executives
Management on call
Rajiv Kaul
EXECUTIVE VICE CHAIRMAN, WHOLE TIME DIRECTOR AND CHIEF EXECUTIVE
Pankaj Khandelwal
PRESIDENT AND CHIEF
Anush Raghavan
PRESIDENT AND CHIEF
Puneet Bhirani
PRESIDENT OPERATIONS – CMS INFO SYSTEMS LIMITED
Avinash Singh
EMKAY GLOBAL FINANCE LIMITED
Key numbers — 40 extracted
INR627 crore
arter marked by geopolitical issues and muted consumption. We delivered a consolidated revenue of INR627 crores, up 5% year-on-year, and a PAT of INR93.6 crores, which is a 3% growth. The above mentioned issu
5%
opolitical issues and muted consumption. We delivered a consolidated revenue of INR627 crores, up 5% year-on-year, and a PAT of INR93.6 crores, which is a 3% growth. The above mentioned issues resul
INR93.6 crore
nsumption. We delivered a consolidated revenue of INR627 crores, up 5% year-on-year, and a PAT of INR93.6 crores, which is a 3% growth. The above mentioned issues resulted in a 10% dip in India ATM transaction
3%
onsolidated revenue of INR627 crores, up 5% year-on-year, and a PAT of INR93.6 crores, which is a 3% growth. The above mentioned issues resulted in a 10% dip in India ATM transactions at an aggreg
10%
year, and a PAT of INR93.6 crores, which is a 3% growth. The above mentioned issues resulted in a 10% dip in India ATM transactions at an aggregate level and also impacted the variable billing in our
INR8 crore
nt business. Our best estimate is that the revenue impact of these would have been to the tune of INR8 crores to INR10 crores in Q1. Additionally, wage increases and long-term union agreements increase ou
INR10 crore
r best estimate is that the revenue impact of these would have been to the tune of INR8 crores to INR10 crores in Q1. Additionally, wage increases and long-term union agreements increase our Q1 costs, and as
9%
itive note, we expanded our cash logistics footprint to 153,000 business touch points, which is a 9% year-on- year increase. We also secured new order wins worth INR500 crores in the quarter, which
INR500 crore
usiness touch points, which is a 9% year-on- year increase. We also secured new order wins worth INR500 crores in the quarter, which also includes a landmark multi-year multi-vendor software contract with th
INR80 crore
built. We won this deal against other strategic bidders and an enterprise value of approximately INR80 crores, and this type of deal is a win-win and align perfectly with our M&A philosophy valued at approx
10X
his type of deal is a win-win and align perfectly with our M&A philosophy valued at approximately 10X FY 2025 adjusted EBITDA and estimated 4X on a post synergy basis, this will help us scale our vis
4X
rfectly with our M&A philosophy valued at approximately 10X FY 2025 adjusted EBITDA and estimated 4X on a post synergy basis, this will help us scale our vision AI business, expand our client base,
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Guidance — 20 items
Rajiv Kaul
opening
“Potential of our platform going forward.”
Pankaj Khandelwal
opening
“Our current capex guidance for the year stands as INR250 crores to INR300 crores versus the initial guidance of INR300 crores to INR325 crores.”
Anush Raghavan
opening
“While these industry trends are challenging in the immediate term, we do believe that it will lead to an accelerating consolidation MSP segment which over the medium term should prove positive for pricing and fixed priced BLA opportunities.”
Anush Raghavan
opening
“In Algo MVS software, we have secured a landmark deal, meaning that now two of the top four Indian banks will be using our software across 85,000 plus ATMs.”
Pankaj Khandelwal
qa
“So there is a delta of around 17% and that is largely because of the project execution.”
Balaji
qa
“So in your opening remarks, you did mention that this deal happened at 10 times EV EBITDA FY '25 and on a post- synergy basis, it will be about 4x.”
Rajiv Kaul
qa
“And importantly, I think from a book value perspective, I think this will be a transaction which will be close to book value.”
Prithvish Uppal
qa
“So, what is that -- what is the strategy going forward in terms of how we plan to work over here, is it more from a client diversification, perspective or just to understand the rationale behind, why you went with these guys in particular, thanks?”
Rajiv Kaul
qa
“But think of the software contract we have with ICICI, this could take 6 to 12 months, but some of these are not under control because when you're building software solutions, integration with bank systems approval process could have sometimes delay which are very difficult to fathom when you start the project and therefore forecasting accurately is not very is not very easy.”
Divyansh Gupta
qa
“So, does it also affect any fresh new orders even, which might get delayed because of all of this or how should we read going forward?”
Risks & concerns — 15 flagged
In a seasonally weak quarter marked by geopolitical issues and muted consumption.
— Rajiv Kaul
Our best estimate is that the revenue impact of these would have been to the tune of INR8 crores to INR10 crores in Q1.
— Rajiv Kaul
Further, the slowdown in consumption is weighing on ATM transactions.
— Anush Raghavan
So, a lot of the revenue and cost attributing it clearly, I mean, to each business unit gets very difficult.
— Rajiv Kaul
So generally we will tend to see that Q1 starts off a little weak and through the year we sort of normalize closer to our margin overall margin profiles.
— Anush Raghavan
Okay and my second question is, so we are witnessing this dip in the ATM transaction, so in your view and how you read the industry, is it purely because of slowdown in the overall consumption and the economy or there are some other factors also at play?
— Krushi Parekh
My second question is that, you highlighted that Q1 is usually a seasonally weak quarter, but if I look back last couple of years Though, at least, the revenue growth has been about 12% to 13% plus, so how do we read that in context to the Q1 of this year and this lastly is on the acquisition.
— Prithvish Uppal
But think of the software contract we have with ICICI, this could take 6 to 12 months, but some of these are not under control because when you're building software solutions, integration with bank systems approval process could have sometimes delay which are very difficult to fathom when you start the project and therefore forecasting accurately is not very is not very easy.
— Rajiv Kaul
FY '25 was in fact a slight decline of 4%, and '26 was 1%.
— Anush Raghavan
So in the last quarter or sometime that whole Chinese camera not being allowed or government expressing concern, does it affect us any which way, us plus Securens?
— Divyansh Gupta
So of course, this change has caused some stress in the system, but all of us are working with our customers.
— Puneet Bhirani
The first one was on, the consumption slowdown which I've been referring to quite a few quarters now.
— Praveen Kumar
The slowdown impact also linked to some outsourcing changes in the last year, I think has clearly affected our growth in FY '25 itself and right now in FY '26 Q1 as you see.
— Rajiv Kaul
When there is some slowdown, people start churning the bottom 5%, bottom 10% of stores.
— Rajiv Kaul
So it currently appears that at least on the, BFSI side, we may have some kind of a slowdown at least for the next six to nine months or maybe even a year.
— Krushi Parekh
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Q&A — 11 exchanges
Q
I just had a query on the margins for both the businesses, the cash and the managed services businesses -- the EBIT margins. So, the margins have fallen quite sharply from -- I'm just reading the numbers for the cash business from 25.5% to 23.9%. So that's roughly 160 bps down. And even in the managed services, it's down from 17% last quarter to 14.1%. So, it's almost -- it's 290 bps down, a significant reduction. And despite the share of the trading revenue actually would have fallen over the last 1 year. So just a bit surprised with the steep reduction in the margin. Could you kindly comment
Rajiv Kaul
Sure. So, Hitesh, I mean, I'll have Pankaj give you a little more detail. But I think we, in the last call, said we would like you to start thinking about the company on an overall composite level because CMS managed services business has become now the second largest customer for CMS ATM cash management. So, a lot of the revenue and cost attributing it clearly, I mean, to each business unit gets very difficult. We continue to report the numbers, but I think look at it overall. Q1 has been softer in the cash business, specifically if you think of the wage hike impact in Q1 will have a dip in m
Q
Thanks for taking my question. My first question is on the status of the 7,000 odd ATMs owned by banks for which AGS was doing pure managed services. So have the banks actually bid those out and if so, have you seen any wins from entire portion of the price? That is my first question. The second question is on, this acquisition that you have done of Securens. So in your opening remarks, you did mention that this deal happened at 10 times EV EBITDA FY '25 and on a post- synergy basis, it will be about 4x. So, can you just elaborate a bit on the synergies, from where the synergies will come and
Anush Raghavan
Balaji. Hi, Anush here. l will just take the first part of the question. As far as the non-BLA ATMs were concerned, I think as we had updated in our earlier calls as well, we've been extending help along with the broader industry in helping banks with the transition. So, we've been able to get our market share, if not slightly more than that in terms of success in some of these contracts. In fact, when we speak about ICICI Bank and a few other private sector banks where we were not present, this has allowed us an opportunity and entry strategy into those, balancing against what was earlier a s
Q
Yes, so the first question is on the margins front that, so understand that salary is something that we have jacked up now, but moving forward in over a period of time, what are the levers that we have to ensure that the margins regaining what it was?
Anush Raghavan
Krushi. Hi, Anush, here. So I think if you look at our historical performance over the years, you will notice that there is a certain cyclicality to our quarterly earnings. There is always Q1 is always a little bit of a step change on account of creating provisions and also paying out what is a fairly large base of people whom we work with, some of them unionized, many of them not. Those agreements are done through the year, but the provisions get created at the beginning of the year. And then we have the rest of the year to as growth comes in, it helps to drive operating leverage and producti
Q
Thanks for taking my question. So I'm sorry if I, if this is repetitive and you may have covered in your opening remarks, so just wanted to understand the order life cycle. So right from when you win the order to when that flows through to the revenue. So if you could just possibly help us understand the timeline for that and how much is the execution ramp up that has happened here. My second question is that, you highlighted that Q1 is usually a seasonally weak quarter, but if I look back last couple of years Though, at least, the revenue growth has been about 12% to 13% plus, so how do we re
Anush Raghavan
Let me take the first two questions, Prithvish. So, I think as soon as the order book and its translation revenue is concerned, we may have spoken about this in the past as well, but just to rephrase it to everybody who's new to us and on this call today. Our order book by definition we only limited to the non-cash business portions of the revenue, simply because these are contracts which are either multi-year, recurring or annuity in nature. This could be brown label ATM contracts, remote monitoring, for instance, or fixed price BLA as well. Generally when it comes to executing a BLA type con
Q
So first question was on the camera. So in the last quarter or sometime that whole Chinese camera not being allowed or government expressing concern, does it affect us any which way, us plus Securens?
Rajiv Kaul
I'll let Puneet, who runs the entire operation, handle that. So of course, this change has caused some stress in the system, but all of us are working with our customers. There are certain cameras that have been STQC approved. So, we are working with all the customers to either get the realignment done and continue the deployment or get some interim relief to manage the situation and then change the cameras as the STQC approval comes. So, does it also affect any fresh new orders even, which might get delayed because of all of this or how should we read going forward? The industry understands t
Q
Yes. Hi, thank you for the opportunity. I had a couple of questions. The first one was on, the consumption slowdown which I've been referring to quite a few quarters now. So just wanted to understand how do you see in terms of your medium term growth target of, let's say 14% or thereabouts that you want to grow. At what point do you think this consumption slow down persisting starts affecting your aim to grow at net growth rate? And what kind of, tactical or strategic action do you see yourself taking to overcome that, right? That's the first question. Second question was on the card services
Rajiv Kaul
I mean, great questions. Let me take the first one. I will refer to again consistently we talked about that as a company our future and growth is linked to three broader terms in India, consumption growth, formalization for GST and whatnot, especially in the retail sector and outsourcing trends in banks. Now I think we've had a macro situation FY '22, '23, '24 where almost all three played out very well, maybe it was post-COVID, post whatever, but it played out very well, including a positive regulatory environment which I think help us drive very solid growth of almost 20% revenue each year a
Q
So it currently appears that at least on the, BFSI side, we may have some kind of a slowdown at least for the next six to nine months or maybe even a year. But how is the traction for us on the retail side, that we have, especially now, I mean for some time we've had an independent sales team as well to tap into those markets?
Anush Raghavan
Krushi. Hi, Anush here. I just on the first part of what you mentioned, I don't think I wouldn't take the interpretation as six to nine months. I think we're seeing this, but having said that as Rajiv said consumption is one part of it, but more importantly so is the bank outsourcing and the order book execution and I think what we see in terms of the pipeline and our ability to both in terms of what the pipelines are upcoming are plus what we already want which needs to be executed. I think we feel we don't think it should be as long drawn out as that. On the retail side, I know we didn't cov
Q
Yes, hi thanks for taking my question. So my questions are with respect to the changing industry structure basically. Firstly, do you think there is an opportunity to get certain specific assets from this beleaguered company? It could be in terms of client contracts, client wins, this could be hard assets like collection ramps. And the second is how quickly do you see this particular event impacting your pricing power and how quickly will it start impacting your margins, the EBIT margin specifics to?
Anush Raghavan
So I think on the first part, of course, with respect to what assets are available, several people other people in the industry have evaluated it. The challenge being as you could guess for companies which have had capital issues and liquidity issues and drawn down all sorts of available debt. So removing the tangled web of who which debtor has what rights over what assets, what's a truly freehold versus what is leased out has been incredibly complex. So for that reason, I think banks decided that the easiest way for them to deal with the issues right now is not to bring in another partner to
Q
Okay. So, as you're a former banker yourself, I think, the views on what, we always really had a simple view, which is right in a room, I think the smartest people are always the bankers, right? So when you're sort of working with them, a counterparty, you can never second guess on trying to outsmart on pricing and thinking that there is any sort of contractual arbitrage available. We've always tried to keep things simple, right? Focus, put our head down, execute, do the right thing and not try to sort of create an upside or an arbitrage led pricing model. On the transaction side, I think the
Rajiv Kaul
And also very respectful. I think it's a good company that tried to do many things. I got into unfortunate situation. I would go to your question. I mean, great question. Let me think about the geo one. We have articulated the geographic expansion before. If I look at the history of large MS players in India who are pioneers in the field much before our time, I think some of them have tried to expand into Southeast Asia and different markets and failed. I think from our side we think of it differently. We are not a cash management company. We are not a managed services company. We are a busine
Q
Hi, Rajiv and team. Just a couple of more questions. So what is the order book in hand right now and how much is expected to go live this year, assuming things go as planned?
Rajiv Kaul
Okay, do you have some other questions while we calculate and come back with that? Sure, The other one was that in respect to the BLA business, earlier calls we used to mention that we are very selective in choosing our BLA that we would operate where it gives us decent IRR and preference I think was always to get fixed contracts. In our presentation we have mentioned only the transaction link BLA revenue contribution. What would be the revenue contribution of fixed BLA and is there a transition happening right now of current transaction link BLA is moving to fixed price BLA? So, in fact, than
Q
Well, thank you so much for the detailed questions. Thank you for your patience. Thank you for being invested in CMS. I do want to call out my team for having worked insanely hard over the last 5 to 6 months in helping the broader industry navigate the issues they've faced. I think we have had a very a solid Q1 in terms of the effort which is going into the business. I think on most key metrics we are doing well. I know the financial numbers may not fully reflected, but I do hope in Q2, Q3 we start seeing improvement which will reflect the quality of effort and quality of the institution in wh
Management
Speaking time
Rajiv Kaul
26
Moderator
13
Divyansh Gupta
12
Anush Raghavan
9
Krushi Parekh
7
Pankaj Khandelwal
4
Praveen Kumar
4
Saurabh Dhole
4
Balaji
2
Puneet Bhirani
2
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Opening remarks
Avinash Singh
Thank you Shruti, Good evening, everyone. On behalf of Emkay Global, I welcome the management and thank them for this opportunity. We have with us today Rajiv Kaul, Executive Vice Chairman, CEO, and Whole-Time Director, Pankaj Khandelwal, President and Chief Financial Officer. Anush Raghavan, President and Chief Business Officer, and Puneet Bhirani, President Operations, I shall now hand over the call to the management for their opening remarks over to you.
Rajiv Kaul
Good afternoon, everyone, Thank you for joining our Q1 FY26 analyst call. In a seasonally weak quarter marked by geopolitical issues and muted consumption. We delivered a consolidated revenue of INR627 crores, up 5% year-on-year, and a PAT of INR93.6 crores, which is a 3% growth. The above mentioned issues resulted in a 10% dip in India ATM transactions at an aggregate level and also impacted the variable billing in our retail cash management business. Our best estimate is that the revenue impact of these would have been to the tune of INR8 crores to INR10 crores in Q1. Additionally, wage increases and long-term union agreements increase our Q1 costs, and as you can see from earlier year trends, this gets evened out over the year through productivity gains and through pricing. In the last five months, our field operating teams have had to work exceptionally hard to help large banks with handling their ATM channel availability issues at an industry level, which we mentioned too in the l
Pankaj Khandelwal
Thank you, Rajiv. Let me walk you through the financial details for Q1. Our consultant revenue grew to INR627 crores, a 5% increase year-on-year, while our PAT reached to INR93.6 crores, up 3% on year-on-year basis. In addition to wage hikes which typically results in softer Q1, this quarter was further impacted by specific sectors, which Rajiv talked about earlier. Both cash logistics and managed services reported 8% year-on-year growth, scaling to INR417 crores and INR258 crores, respectively. The total EBITDA grew by 3% year-on-year to INR159 crores while EBIT remained flat at INR113 crores, because of timing difference between the investment and corresponding revenue accruals. Our balance sheet remains robust and we will continue to disciplined approach of capital allocation to support both our organic growth and strategic acquisitions like Securens. Our current capex guidance for the year stands as INR250 crores to INR300 crores versus the initial guidance of INR300 crores to INR3
Anush Raghavan
Thanks, Pankaj. Good afternoon, everyone. Let me share with you a more detailed view of the underlying market trends to the best of our knowledge. As expected, the ATM install base has been quite impacted due to AGS-related ATM shutdowns across banks. We did mention it to you last quarter that it would take a while for the dust to settle, and the situation right now still remains quite fluid. These contracts are complex, with multiple asset ownership issues, unpaid vendor dues, which are all unresolved. Most of the banks are taking time to clean up this old legacy network, preferring to shut down the ATMs and later roll out new RFPs for replacement or expansion. Out of the almost 20,000 brown label ATMs of AGS, almost 50% of them have been shut down as we speak. The AGS issue has affected liquidity and credit availability in the sector. This has caused an adverse impact on certain small and mid-sized MSPs who are taking time to raise capital for fresh ATM deployments, even for those or
Rajiv Kaul
To summarize Anush's commentary, I think I want to reiterate that we will focus as a team on doing the right things from a long-term perspective. We aren't chasing growth at any cost. We are very careful and we are walking away from low margin RFPs. We retain our pricing discipline and we prioritize contracts which will give us predictability and scale. At the same time, we continue to compete vigorously against lower margin players to gain market share across most of our businesses. This quarter itself was about disciplined execution amid a software environment. We delivered stable financials, signed a strategic acquisition, and continued to make the long-term investments in our brand, people, and automation. In our last call, we had highlighted our strong FCF and our balance sheet strength of over INR1,000 crores. This is a phenomenal strength. Over the past few years, many of you have regularly asked about our M&A plans and have been patiently waiting to hear more on this front. Our
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