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CMS Info Systems
Our verdict on CMS Info Systems isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
The SBI cash RFP has concluded and is currently in the contracting and final approval stage, set to go live in H2. (1 met across 1 tracked commitment)
“The bank has unfortunately decided, however, to cancel the RFP, refloat it to get more bidders. We hope for this to close in Q2 and go live in H2.”
ESOP costs remain at the INR 10 crore level for the current quarter, with the expected decline to INR 8, 6, and 4 crores still on the projected trajectory. (2 in progress, 1 exceeded, 1 met across 4 tracked commitments)
“The cost, this quarter cost was around Rs.10 crore. And going forward as we have guided you earlier also, in next two quarters that cost will be around Rs.10 crore and after that it will gradually reduce to Rs.6 crore, Rs.4 crore and Rs.3 crore.”
See the full cited Management analysis of CMS Info Systems
How durable is the business?
CMS has strengthened its market leadership in Cash Logistics, increasing its revenue market share to 42% and expanding its network to cover 97% of Indian districts. (2 expanding)
“the contribution from our largest customer has reduced from 22% of revenue to 18%. The whole category of private sector banks and the direct-to-retail revenue, that contribution is increasing from 24% to 30%. The PSU bank revenue contribution is up from 19% to 22%”
The remote monitoring business (Vision AI) has scaled to 30,000 sites and is expected to reach 10% of total revenue by FY27. (5 expanding across 2 engines)
“Managed Services & Technology is up 18% quarter-on-quarter from INR 216 crores to INR 254 crores... Managed Services & Tech EBITDA up by 12% to INR 78.5 crores.”
See the full cited Business Model analysis of CMS Info Systems
Where does growth come from?
The AIoT remote monitoring business (Hawkai) is on a high-growth trajectory, having scaled 10x in three years and projected to double again in the next three. (5 accelerating across 5 signals, 1 leading indicator)
“Our Hawkai business specifically is growing rapidly... from FY 2024 to 2026, we are seeing this double from INR 100 crores to INR 200 crores level range.”
The order win momentum is accelerating significantly, with new order wins doubling compared to the previous year, providing a strong base for FY25 deployment. (5 accelerating across 5 signals)
“Our total revenue from this is INR1,000 crores over 10 years, of which INR 500 crores would be incremental revenue to CMS... It is now getting rolled out in Q4.”
See the full cited Future Growth analysis of CMS Info Systems
What could break the thesis?
Margins continue to face pressure with EBIT remaining flat at INR 113 crores despite revenue growth. Cash business margins fell from 25.5% to 23.9% and Managed Services from 17% to 14.1% due to wage hikes and front-loaded investments. (4 intensifying, 1 easing, 1 high-severity)
“PBT before exceptional items... Q3-FY25 125... Q3-FY26 88... YoY -30%”
The risk is intensifying as management cites 'Tepid consumption' impacting ATM transactions and retail collection volumes, leading to slower momentum in FY26. (2 intensifying, 3 easing, 1 high-severity)
“Cash [Revenue] YoY -5%... Cash [EBIT] YoY -39%”
See the full cited Risk analysis of CMS Info Systems
Read the full thesis on CMS Info Systems
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