CMSINFONSENovember 11, 2025

CMS Info Systems Limited

10,020words
93turns
6analyst exchanges
5executives
Management on call
Rajiv Kaul
EXECUTIVE VICE CHAIRMAN
Pankaj Khandelwal
CHIEF FINANCIAL
Anush Raghavan
CHIEF BUSINESS OFFICER – CMS INFO SYSTEMS LIMITED
Puneet Bhirani
CHIEF OPERATING OFFICER – CMS INFO SYSTEMS LIMITED
Sonal Gandhi
ASIAN MARKET SECURITIES
Key numbers — 40 extracted
INR500 crore
mentals with consolidation will deliver growth in H2 in FY '27. Order wins for the quarter are at INR500 crores, most of which are fixed price contracts in nature and from leading private sector banks. Octobe
INR15 crore
g with weaker ATM transaction volumes due to extended rates have led to a revenue impact of about INR15 crores. Post the AGS issue, banks have reduced credit limits and exposure to certain MSPs. This has imp
INR10 crore
impacted the working capital cycles and increased our DSOs. We have taken a prudent provision of INR10 crores in this quarter, a proactive step to maintain balance sheet hygiene, while
6%
a clear sign of improving pricing discipline in the ecosystem. At CMS, we are also targeting a 6% improvement in pricing and realizations in our ATM cash business by March. In our retail business
20%
In our retail business, volumes were softer during Q2, but recovered strongly in October with a 20% increase on a month-on-month basis. This is the highest since the pandemic. Our investments in gi
INR 3000 crore
The RFPs for over 35,000 branches are being formulated by the bank. This itself represents a huge INR 3000 crores plus revenue opportunity for the industry. This makes us confident of achieving our HAWKAI targe
3%
it, and good afternoon, everyone. Our consolidated revenue this quarter declined by approximately 3% from INR627 crores to INR609 crores on a sequential basis, primarily due to temporary dip in our
INR627 crore
good afternoon, everyone. Our consolidated revenue this quarter declined by approximately 3% from INR627 crores to INR609 crores on a sequential basis, primarily due to temporary dip in our ATM cash logistics
INR609 crore
veryone. Our consolidated revenue this quarter declined by approximately 3% from INR627 crores to INR609 crores on a sequential basis, primarily due to temporary dip in our ATM cash logistics volume. From seg
5%
cash logistics volume. From segmental revenue basis, Managed Services & Tech revenue increased by 5% sequentially from INR258 crores to INR271 crores. And cash logistics volume dropped by 5% from
INR258 crore
. From segmental revenue basis, Managed Services & Tech revenue increased by 5% sequentially from INR258 crores to INR271 crores. And cash logistics volume dropped by 5% from INR417 crores to INR395 crores,
INR271 crore
venue basis, Managed Services & Tech revenue increased by 5% sequentially from INR258 crores to INR271 crores. And cash logistics volume dropped by 5% from INR417 crores to INR395 crores, linked to drop i
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Guidance — 20 items
Rajiv Kaul
opening
“Our ATM Management Solutions business is going through a period of transition and churn, which has a bearing on growth and profitability in H1, but our competitive position, strong business fundamentals with consolidation will deliver growth in H2 in FY '27.”
Anush Raghavan
opening
“These multiyear agreements are now complete and will be offset through productivity norms over time.”
Anush Raghavan
opening
“With clarity on deployments, new PSU contracts and ongoing cost initiatives, we expect sequential improvement in both revenue and margins through Q3 and Q4.”
Puneet Bhirani
opening
“On our HAWKAI remote monitoring platform, it continues to grow rapidly and is on track to reach 50,000 plus sites by the end of the year.”
Puneet Bhirani
opening
“In October, we achieved a significant milestone for a critical unified build and operate project at the PSU bank covering approximately 2,000 branches with extensive AI use cases.”
Puneet Bhirani
opening
“This makes us confident of achieving our HAWKAI target of 80,000 sites by FY '30.”
Pankaj Khandelwal
opening
“We expect to return closer to our FY '25 price margin level by end of this fiscal year, supported by incremental revenue from new contracts and network cost optimization initiatives.”
Rajiv Kaul
opening
“As this project goes to live status, revenue from this outsourcing contract is an incremental INR500 crores opportunity for us over the next 10 years.”
Rajiv Kaul
opening
“ICICI Bank is on track to become our second largest customer.”
Rajiv Kaul
opening
“We will, on our part, continue very aggressive investments in the HAWKAI tech platform to drive this high 50% growth CAGR opportunity and for this to become a large part of our revenues.”
Risks & concerns — 15 flagged
Taken together, about 4,000 ATMs were temporarily inactive within our portfolio, which, along with weaker ATM transaction volumes due to extended rates have led to a revenue impact of about INR15 crores.
— Anush Raghavan
Our PAT for the quarter was INR73 crores, reflecting a 20% decline compared to INR94 crores in the previous quarter, with PAT margin at 12.1%, a contraction of 280 basis from the last quarter.
— Pankaj Khandelwal
This was driven by the flow-through impact of the revenue dip, temporarily lower realization from the largest PSU bank customer and higher provisioning due to increased AR on account of reduced credit availability to MSP ecosystem post AGS.
— Pankaj Khandelwal
In addition, there is an impact of higher wages due to signing of long-term base settlements, which are renewed average 3 to 4 years.
— Pankaj Khandelwal
On cash flow, H1 is seasonally weak in the terms of collection and DSO, resulting in the lower OCF in the first half of the year.
— Pankaj Khandelwal
So I think overall, what we will have to examine is basis the risk profile and what amount of money we have to handle and the network density and reach we will start having more of our operations, remote areas on a GIG-based model, where we don't need to deploy the entire crew and all.
— Rajiv Kaul
The provisions that we've taken, is there incremental stress in H2 as well?
— Baidik Sarkar
So in addition to the usual risk provisioning, we had taken incremental ECL provisioning due to elongated payments from certain MSPs.
— Pankaj Khandelwal
And we expect that a normal risk provisioning plus ECL provisioning to be in the range of 4% revenue in line with our historical trend.
— Pankaj Khandelwal
H1 generally, I think there's just always seasonally very weak for payment cycles from banks to vendors to MSPs to us directly.
— Rajiv Kaul
No, we provide on the basis of accepted credit loss and risk provisioning what we do for our cash business.
— Pankaj Khandelwal
Tech businesses across any platform have that risk and you are to live with that risk.
— Rajiv Kaul
So I just want to first understand that this decline in the business touch point, is it purely related to the ATMs because of -- so what is the reason for the shutdown of these ATMs, first of all?
— Krushi Parekh
The second reason for that churn that we witnessed has been public sector banks, which had awarded RFPs under mostly the brown label ATM contracts in last year to MSPs those MSPs because of, again, the AGS situation, banks which had curtailed their limits and borrowing exposure to some of the midsized ones, found it difficult to have the capital adequacy to roll out these contracts.
— Anush Raghavan
So that's sort of led to that temporary decline of 4,000 ATMs in the last 3 months.
— Anush Raghavan
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Q&A — 6 exchanges
Q
Thanks for the detailed background and context setting a couple of questions. Just so that I got your previous -- your last comment, right? Did you call out that the combination of cash management services and managed services revenue will be about INR1,225 crores in H2? This is excluding the hardware component. I'm sorry if that's a repetition.
Rajiv Kaul
Yes. So I think, Baidik, if you reflect back on both the Analyst Day and the way we've said businesses are merging in each other, we sort of are focusing on the annuity and services revenue. Services revenue will cut across all our business lines and will not include the product revenue. Right, right. No, that's interesting. So the SBI RSP that we've closed this quarter, right? So as the base case that tantamount to about a INR70 crores to INR150 crores revenue potential per annum. But I also understand that there's already billing a part of that for services that we're doing by measure of goo
Q
So my question was regarding the 3 segments that you have, right, for ATM cash management solution, retail cash, retail solutions and technology solutions, how are the profile margins profitability profile margins are defined in this each sector, right, because the businesses are completely different, like the cash logistics business, you have like operational efficiency needs to be on top and cost leadership is important to grow that business? However, if you look at the technology side of business, the innovation part, the product differentiation comes into place. So how is the profile margi
Rajiv Kaul
So I think, first of all, the 3 segments we talked about, we will start reporting revenues by these segments by end of the year. We've just finished our large ERP refresh. And we ended the year, we'll give you revenue by the 3 businesses we explain to you at the analysts summit. Coming to profitability, I think it's not just profitability also return metrics, ROCE. I think for us, every business, if you look at our overall 25% ROCE, I think there will be some business a little higher, some a little lower. But our overall aim is to create these 3 platforms, which can self-fund the growth and th
Q
Yes. So I just want to first understand that this decline in the business touch point, is it purely related to the ATMs because of -- so what is the reason for the shutdown of these ATMs, first of all?
Anush Raghavan
Krushi, I think we detailed somewhat in our Investor Day, but just to briefly summarize. Post the AGS situation, many private sector banks, both used it as an opportunity, also looking at overall ATMs, which weren't contributing meaningfully in terms of transactions, they prune those estates down. So some of the large private sector banks at the industry level shut down large parts of their offsite ATM network, instead wanting to refocus on setting up new recyclers, either on -- mostly on-site locations. The second reason for that churn that we witnessed has been public sector banks, which had
Q
Really by the effort for maintaining the result business as it has been seen for last 12 quarters. I have some personal query, which is related to the ATMs only, as I find that with the increase of the digital transactions. How the ATMs expansion by the banks will take place, say, 5 years from now, and it will impact our currency logistics business and ATM management business? How you plan to address the same?
Rajiv Kaul
So I think for the currency ATM business, first of all, if you look at both driven by public sector banks needing to access their reach of customers, their availability. Banks need to have x number of ATMs available to consumers at all times. We think there will be some steady growth in the installed base. Interchange has increased by RBI in May, and the white label becomes an interesting opportunity where deployers are looking to increase ATM network in semi-urban room. We are seeing higher usage of ATMs in semi-urban room, and that's where we think the PSU banks and WNA operators can service
Q
A couple of questions. The first 1 was on the EBIT margin on the cash logistics business. You've attributed the drop to lower -- I mean, lower network utilization and the provisioning. So -- but particularly looking at the network utilization part of it, how much of it do you attribute to the consumption slowdown versus these temporary factors, which you attributed to in terms of southern network being down currently. So could you throw some light on that in terms of where do you see this heading in the next -- in H2 and also during FY '27? This was the first question. The second question was
Anush Raghavan
To your second question first, is the easier one. I think broadly, the switch from upside to on- site we generally view it favorably for the simple reason that it's not so much about where the ATM is but what is the nature of the outsourcing model. When banks are outsourced and offsite, they generally had a preference to move to sort of move to a transaction model simply because the selection of the site was being done by the MSP and not the bank. Whereas when it switches to an onsite, this is more a bank seeking a higher quality of engagement with respect to how a branch ATM should be service
Q
Well, thank you so much for so many detailed questions. We thought we would have a more descriptive monologues from our side and hopefully reduce the question, but I'm happy to hear them out and give you better clarity. As we had October is off to a good start. We hope that trend goes out well for us the rest of the year, and we hope to have a much better H2 to bring us back online for our FY '27 goals. Thank you for your time, interest and patience.
Management
Speaking time
Rajiv Kaul
24
Anush Raghavan
14
Baidik Sarkar
13
Pankaj Khandelwal
9
Krushi Parekh
9
Moderator
8
Vikrant Bandekar
8
Praveen Kumar
4
S.K. Devnath
2
Sonali Gandhi
1
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Opening remarks
Sonali Gandhi
Thank you Trisha. Good afternoon, everyone. On behalf of Asian Market Securities, I welcome the management and thank them for this opportunity. We have with us today Mr. Rajiv Kaul, Executive Vice Chairman and CEO; Mr. Pankaj Khandelwal, CFO; Mr. Anush Raghavan, Chief Business Officer; and Mr. Puneet Bhirani, Chief Operating Officer. I shall now hand over the call to the management for their opening remarks. Over to you, sir.
Rajiv Kaul
Thank you, Sonali. This is Rajiv. Good afternoon, everyone, and thank you for joining our Q2 FY '26 analyst call. Many of you would have attended our second Analyst Day in Mumbai on September 30, wherein we shared that in detail the industry landscape, H1 trends, some surprises and challenges and also the opportunities for FY '27 with potential for FY '30. Our youngest and fastest-growing tech solutions business is growing rapidly, generating significant momentum. The Securens acquisition has been closed and the teams are now working together on both the go-to-market and the synergy implications. Our Retail Solutions & Currency Logistics business has had an impact in H1 from subdued consumption levels and extended rains, which affected rural income significantly. Our ATM Management Solutions business is going through a period of transition and churn, which has a bearing on growth and profitability in H1, but our competitive position, strong business fundamentals with consolidation will
Anush Raghavan
Thank you, Rajiv. Good afternoon, everyone. Second quarter was a transitional quarter for us. The industry is still recalibrating after last year's consolidation, and that has temporarily affected deployment cycles and network utilization. Several large private sector banks have rationalized their offsite ATMs due to lower transaction levels, while the rollout of new BLA ATMs under PSU contracts slowed as some MSPs have faced funding constraints. Taken together, about 4,000 ATMs were temporarily inactive within our portfolio, which, along with weaker ATM transaction volumes due to extended rates have led to a revenue impact of about INR15 crores. Post the AGS issue, banks have reduced credit limits and exposure to certain MSPs. This has impacted the working capital cycles and increased our DSOs. We have taken a prudent provision of INR10 crores in this quarter, a proactive step to maintain balance sheet hygiene, while continuing to ensure we significantly improved collections and cash
Puneet Bhirani
Thanks, Anush. So in our tech and payments business, we already demonstrated our tech progress and solutions at the Analyst Day. We welcome all of you to come and visit our tech center at Mahape, Navi Mumbai. On our HAWKAI remote monitoring platform, it continues to grow rapidly and is on track to reach 50,000 plus sites by the end of the year. This started at around 30,000 sites at the beginning of FY '26. On the enterprise side, our non-BFSI portfolio continued to expand. We have successfully implemented 1,300-plus dark stores for a leading quick cost player and received an additional order for 500 sites. The pipeline for this business is growing strongly across NBFCs, insurance gold loan, logistics, diagnostic change and others. In October, we achieved a significant milestone for a critical unified build and operate project at the PSU bank covering approximately 2,000 branches with extensive AI use cases. This represents one of the first large-scale integrated surveillance transform
Pankaj Khandelwal
Thanks, Punit, and good afternoon, everyone. Our consolidated revenue this quarter declined by approximately 3% from INR627 crores to INR609 crores on a sequential basis, primarily due to temporary dip in our ATM cash logistics volume. From segmental revenue basis, Managed Services & Tech revenue increased by 5% sequentially from INR258 crores to INR271 crores. And cash logistics volume dropped by 5% from INR417 crores to INR395 crores, linked to drop in ATM count and retail cash volume per point. Our PAT for the quarter was INR73 crores, reflecting a 20% decline compared to INR94 crores in the previous quarter, with PAT margin at 12.1%, a contraction of 280 basis from the last quarter. This was driven by the flow-through impact of the revenue dip, temporarily lower realization from the largest PSU bank customer and higher provisioning due to increased AR on account of reduced credit availability to MSP ecosystem post AGS. We are actively engaging with these customers to streamline the
Rajiv Kaul
Thank you, Pankaj. Let me summarize the key points for all of you. The SBI cash RFP has concluded and contracting and final approvals are under progress. As this project goes to live status, revenue from this outsourcing contract is an incremental INR500 crores opportunity for us over the next 10 years. More importantly, this also creates a very good reference point for other PSU banks to outsource more bank-owned ATMs directly for cash management with strong companies. ICICI Bank is on track to become our second largest customer. Post AGS, the bank shut down almost 3,000 off-site ATMs in H1, but they are working with us to rapidly deploy currency recyclers to bring back the network to earlier levels. With just these 2 contracts going live in H1, the ATM management solutions business should get back to growth in H2 and deliver double-digit growth in FY '27. Three other large bank RFPs across both private sector and public sector are expected to conclude in the next 6 to 9 months, which
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