Growth, market share, and margins remain our priority: Rajiv Kaul, CMS Info Systems

I have to thank Baring Asia and, now EQT, for one, being very supportive in their nine-year investments at CMS. Secondly, at each point of a sell-down, whether it was IPO or post-IPO, they left value on the table for investors, to make sure that any new investor coming into CMS has had a very good experience. Of course, fundamentally, the company has to do well and has to perform basis, whatever we have forecasted. During IPO, people’s worries were that this company may not have a longer-term story. One investor was very direct with us and saying, you have a terminal value issue. In a very focused manner, we are trying to make sure that we can prove the opposite. Thirdly, my own stake in the company has gone up over this period, which should give people more confidence on my plans. We’ve also been explaining to people that we are not a play on cash management per se. Today, we work for banks, NBFC, insurance companies and retail. We aim to become a much broader player in the outsourcing of business services. 

We don’t care about assumptions people make on terminal value. We care about how are relevant to the client, and how do we solve problems for them at scale. Alot of our technology service businesses have ramped up very well. Our managed services and technology solutions business is growing at almost 30-35%, and reasonably decent margins. The business has gone from zero size to almost Rs 1,000 crore revenue in less than 10 years and almost 98% of it is organic. We like to be frugal and disciplined about capital allocation. 

I thought of changing the name before we bought the company in 2009. At that time, it was linked more to computer maintenance services. Meanwhile, we became a cash management company. It (CMS) is great because banks have a cash management services department called CMS and when they think of cash services, they think of CMS. For our cash logistics business CMS is the best name we can hope for. However, we are today more than just CMS as a brand and there are other growing businesses. We are giving time to see how the new thrust areas will get established. But it (name change) is a question we have been debating actively. 

We don’t want to get under the quarterly pressure of being monitored and measured and do something stupid in the longer term of the company. Our priority remains strong growth, market share, and margins and in the same order. But the tricky thing for any good management team is to not make a mistake in balance of these three. Market share is something we will not compromise ever. Our margin profile has dramatically changed. Four or five years ago, we were at 18-19% EBITDA margin. Now we are at 28.3% EBITDA margin. There are very few services companies globally which will be at 28-29%. 

There are the two companies doing it. We would love to know how they’re doing. It’s (payments) been over-invested by the VCs. Most of our businesses have done well when customers have asked us for a specific business the incumbents aren’t able to scale it. Our managed services business started where a customer said, “Why don’t you sell us ATMs?” In most of our businesses, we are a market leader, or we’re not involved. If we can’t see a route to becoming a market leader, we don’t want to be in the sector. 

That’s a business which reminds me of my technology days. It’s enterprise solutions in a way and it has helped us gain wallet share with large enterprises through our 8 unique service & solution capabilities. Our number of large BFSI accounts with Rs 100 Cr+ annual revenue has increased from 3 in FY22 to 8 in FY24. Our combined addressable market is a potentially Rs 22,000 crore market by FY27, if we don’t launch any new solutions. Even if we get to 25% of the market, that doubles us by then. Our AIoT Remote Monitoring Solution business, a very nascent one, just hit Rs 100-crore mark. We started by doing AIoT machine learning solutions for safety and security at ATM sites. Then we did branches.