First of all I want to clarify is that CMS infosystems is not just ATM company. It is disappointing to see people who invested large sums of money just did surface level analysis.
What many ignore:
Cash management backbone of India
Managed retail cash logistics - over and above linking retail CMS with Remote monitoring etc ( cash in circulation is increasing)
Remote monitoring and IoT layer(growing at good pace) → expanding beyond banks and ATMs to ecommerce etc - link this to other services they provide like retail cash.
Tech enabled operators survive ( cross selling and better integration)
And most importantly it is one of the most prudent company out there with best capital allocators - see their recent acquisition and it’s valuations inspite of being a good player. They are OK to letgo of business if it doesn’t make economic sense.
What we think is Narratives lead to price. But mostly it’s other way round Price decides narratives.
Remember good capital allocators survive and thrive.
Disc: invested and will continue to hold as long as Rajiv kaul remains there.
Hi Sanjeev, I agree with your point that they are the best capital allocators and the another leg of growth is Retail Cash logistics and AI solutions or monitoring business. But currently the ATM solutions business has 54% of the total revenue around 1300 crore. So, assigning terminal value to this segment becomes a little tough for me. I would better assign terminal value of the business to the Monitoring business than the other two segment then that would also mean that this industry is not consolidating. There are many old players doing this and i would be a little hesitant to keep the peer group same as the ATM solutions. Cybersecurity is a hype with the recent AI interventions and there is no manpower needed. So what are the levers of growth that you see when you made the investment apart from the company being the best capital allocators is what I am trying understand. I am too naive to make a perception in investment in my early but will be happy to learn from people currently.
I understand the terminal value concept and how people use DCF to justify whatever valuations they wanted.
I will ask some questions to myself:
It’s free cash flow is around 330 cr right now. How many companies can generate fcf > net profit? Look at the quality of earnings
Look at cash and cash equivalents in this quarter. The amount of strength and optionality it gives at the times of crisis.
Will the ATMs become zero in next 5 to 6 years?
Why did amount of cash through ATMs declined? Is it through low withdrawal limit per transaction per day? How does CMS charge money is it dependent on transactions or value or fixed?
Will ATMs be lucrative for PSUs or pvt banks to run by themselves? Isn’t it better to outsource to scaled players?
Are they looking to diversify by the cash the atm business generating? (Yes)
Will govt implement low denomination ATMs in future? If so who can be profitable at such low value transactions?
I totally understand terminal value thing but good companies with sensible management and balance sheets will find a way. Most of the time past discipline translates into future. May good companies thrive and bad allocators remain bad(pulak prasad). And shouldnt investing be just that. Being with good people and giving money to those who spends well. I understand all the trends sunshine sector etc. but how many translates those order books to profitability. Many a time just linking to a specific industry is increasing mcaps. Imagine a 200 cr company with lackluster profits being more mcaps than CMS info.
For me investing means being with good people and rewarding Good management.
This might differ, but that’s how I frame before investing.
The other thing I like about this business is it is supply constrained. Very unlikely any big player will enter. That is the game CMS is trying to play as well - to consolidate in a small industry so that it can have some pricing power.
We have to see how it plays out. If the margins recover along with modest growth as the management projected, I feel it is a compounder. Optionalities will come along the way as they have cash on hand and continue to generate.
I will monitor how the management delivers against their projections - not because I doubt management’s capabilities, but if the business has inherently become worse as banks start to think differently about cash, we know it is the quality of business that will eventually win.
This Finshots’ article breaks down India’s cash paradox perfectly – why cash in circulation keeps rising even with digital payments exploding everywhere.
For CMS, external factors played out probably not in the way that management expected over the last 6-8 quarters. As a result, they have not been able to deliver against their projections.
In H2 2024, they projected 2500-2700 Cr topline for FY25. In Q1 FY25, they said they will deliver towards top end of this guidance, next quarter moderated it to mid-range and finally delivered below 2500 Cr.
In Q3 FY25, management said their focus would be to close Q4 strongly and set up for a good FY26. But so far FY26 has hasn’t played out well for them.
My sense is that the price is punished due to two back to back years of under delivery against their initial projections. Market will take some time to build trust in their projections again. On top of it, market has always discounted the long term prospects of cash (even in the peak of 2024 bull run, their P/E was <30). Additionally their new guidance is ~12% topline organic, another 4% coming through acquisitions, totaling ~16% through 2030. This is a bit lower than their earlier growth.
I am invested - my original thesis of supply constrained industry, consolidation, good management, good capital allocation still remain. I will monitor how they deliver FY27 and tone of the management in FY27 about future prospects.
PPFAS Asset Management Private Limited disclosed acquisition of 1,50,000 shares in CMS Info Systems Limited through open market purchase on March 24, 2026. The acquisition increased PPFAS Mutual Fund’s holding from 7.88% to 7.97%. On another note CMS Info systems completed acquisition of FSSs managed services business.
I feel Cash in circulation(CiC) is not the main KPI to be tracked for monitoring CMS growth or performance. In Absolute terms, CiC is going to increase in India due to expanding GDP and ratio of CiC to GDP will be approx. 11% I beleive.
CMS already has 40% market share and its main matrix is how ATM withdrawls are used and how quickly cash is replenished by Banks. Cash movement between banks and ATM machines provide them the revenue.
Second Indicator is number of ATMs serviced by CMS, when the density is more in the same route, their cost comes down and margins increase.
Increase in retail cash management points where the retail cash is collected and desposited to their accounts for a fee
Increase in market share is unlikely has they have already captured 40% market share.
Also need to monitor their tech platform business. Overall can be a decent growth story.
Net cash in books, Free cash flow positive. Very boring business makes it good. If we can pick at 10 PE, nothing like it.
Has anybody studied or considered the impact of Brinks acquisition of NCR Atleos?
From Google:
“NCR Atleos is a leading global financial technology company specializing in self-service kiosks, ATMs, and digital banking solutions. In India, they maintain a significant footprint for local financial institutions, including installing over 100,000 ATMs for banks like the State Bank of India. “
I couldn’t find the revenue figures of their India division as company doesn’t report break-up by regions in their filings, regardless this looks like a significant threat to CMS Info systems though Rajeev Kaul pooh-poohed it during the earnings call.
Brinks is a worldwide leader and with NCR Atleos it will only be strengthened.
Have seen few Brinks cash handling vans but few and far between in Bangalore vis-a-vis CMS, however this could change going forward considering India is still a growing market vs the West and opportunity size is big in developing markets for the combined entity.
Until now, Brinks was a marginal figure in India and Rajeev used to use that metric to boast about the company’s perfomance over the years vs others. Ironically they even used the case study of Brinks valuations vis-a-vis CMS to show how undervalued CMS was. Hope it doesn’t come back to bite them.
Thoughts of long term holders in the stock would be appreciated.
thanks, was insightful! and helps understand why CMS has been facing pressure despite large respected mutual funds like PPFAS continuously picking up stake.
Traditionally PSUs banks have been a stronghold of CMS; but in recent quarters they announced 2 large deals with ICICI and subsequently with HDFCBank too. Private banks will soon more from 27% to 30% of their Cash management business.
Also to counter any threats from NCR’s ATMs, CMS has gone in partnership with South Korean firm, Nautilus Hyosung to deploy its Cash Recycle Machines (CRMs) and they have been actively pursuing banks to switch from traditional pure Cash dispensers (ATMs) to high-efficiency CRMs - which is a closed loop circuit ensuring the cash deposited during the period is accounted for and made available for dispensing reducing the frequency of Cash Van visits to the ATMs.
The biggest fear for an PSU bank while switching hardware is software incompatibility and CMS plans to address that through its proprietary Algo Multi-Vendor Software (MVS). and once the dependance on the hardware goes away it can easily convince banks to swap the NCR machines for its CMS CRM.
We shall get to know soon, once the RFPs from PSU banks open up again for renewal starting end 2026 - 2028. The ones that were last awarded during the 2018-2020 period.
The Confederation of ATM Industry (CATMi) has sought compensation of ₹100 crore from the banking industry while flagging concerns to the Reserve Bank of India (RBI) that State Bank of India (SBI) is disproportionately routing cash to ATMs in tier 1 cities, leading to shortages in tier 2 and tier 3 centres and raising the risk of widespread shutdowns.
CMS Info Systems recently posted on their socials that they have made a new website for their HAWKAI segment here is the website:- https://www.hawkai.ai/
