Target: ₹720
CMP: ₹604.55
CMS Info Systems has become a vital partner for India’s banks, NBFCs, retail, and e-commerce sectors, providing critical services and solutions across seven business lines. It achieved an impressive revenue/PAT growth of 20/27 per cent between FY21-24, supported by EBITDA & PAT margins of 26.5 per cent and 15.3 per cent, respectively, and an RoIC of 24.2 per cent in FY24.
It enjoys a strong moat with high entry barriers and aims to position itself as a B2B platform business.
We initiate coverage on CMS Info with a Buy and a TP of ₹720, on 22x FY27E EPS of ₹33. CMS Info’s expansion into segments outside the ATM ecosystem carries an option value with scope for a potential rerating. We expect 14 per cent revenue and 13 per cent adjusted PAT CAGRs through FY24-27.
The 25 per cent payout ratio may lead to a 1.5 per cent dividend yield in FY27. With a debt-free balance sheet and strong return ratios – FY27E ROIC of 27 per cent and ROE of 21 per cent (lower due to rise in cash) – valuations are attractive.
CMS Info is incubating two new businesses, which are not factored into the estimates. Key risks are ineffective capital allocation and slower growth in retail cash management
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.