Radiant Cash Management Services – Asset Light Play On Cash Logistics

iyeron · July 2, 2023, 7:08am

Introduction :

Cash logistics solutions include cash-in-transit, cash management services, ATM replenishment & services, money processing, vault outsourcing, transportation of valuables, intelligent safe services, and payment services, among others.

Cash Management, in particular, includes the following services: -

Currency Management
Currency Distribution
Coin Distribution
Exchange of Notes
Combating Counterfeiting

The growing security concerns among banks and business organizations, which require secure cash movement and management services, have had a favorable impact on the global market for cash logistics services. The rising demand for cash in emerging economies, as well as the growing number of fully automated cash-in-transit equipment in developing countries, is likely to propel the cash logistics market forward.

In developed markets such as US and Europe, the degree of outsourcing of cash handling is strong due to the maturity and high awareness with banks and large retailers to reduce their cash management costs and focus on their core business activities. Cash handling is in its early phases in India. Global players have been providing Retail Cash Management services for several decades now – Brinks since 1859, Loomis since 1918, Group 4 since 1960s and Prosegur since 1976. RCM is a relatively new sector in India – market leaders Radiant and CMS have been offering these services only since FY 2005 and FY 2001 respectively. The cash management services market has a tremendous potential to be exploited in areas like retail cash management, as well as other value-added sectors like ATM cash management and automation solutions. The amount of cash in circulation and the number of cash transactions that occur on a daily basis are two significant influencing factors that influence users such as banks and shops to outsource cash operations. Despite the rise of digital transactions in developed countries, cash usage continues to rise, which is more typical of the market scenario in an emerging economy like India.

Competitive Landscape :

In India, the main players are CMS Infosystems, Radiant and SIS. Writer Safeguard (WSG) and a couple of other small pvt limited companies seems potential candidates for consolidation. However, in terms of business model, Radiant is a close match with CMS Infosystems albeit leading CMS in the RCM space.The Cash management subsidiary of SIS (joint venture with Prosegur)is one other player but diversified across ATM cash management and RCM similar to Write Safeguard. Overall, in my opinion, business wise CMS seems a better player diversified through ATM cash management services however the present growth opportunities largely favour Radiant.

Business Overview:

The Indian Cash management market can be split into: ATM cash management, Retail Cash Management (RCM) and Dedicated Cash-in Transit Vans (DCV). Other services include transportation of jewels, art works, valuables, bullion and cash processing and vaulting. BFSI, NBFCs, malls, fashion stores, food and beverage stores, pharmacy chains, and hospitals are all boosting the cash management market in India, especially the RCM business. These industries deal with enormous amounts of cash and need the help of private cash management companies. The Indian cash management market is consolidating, mostly as a result of smaller/unorganized players quitting the market due to stringent compliance requirements and a growing trust among scale players.

Key Business Characteristics:

B2B - Outsourcing arm of banks and retailers
Geographical diversification: Pan-India presence currently
Repeatable business based on pure operational efficiency
Asset light (buildings, vehicles and computers and accessories on lease basis)
Potential IP (proprietary software assets)
Likely duopoly as seen globally
Entry barrier: Compliance with RBI incl maintaining 1 Billion INR net worth at all times
Customers: Banks and reasonable sized retailers diversified across sectors/industries
Long term contracts with annual automatic renewal with some flexibility to re-negotiate prices

Business Portfolio:

RCM market consists of CMS Infosystems and Radiant as the two key players. While CMS Infosystems has a differentiated offering across the cash management services market (including ATM cash management, RCM and DCV), Radiant has established itself as an integrated cash logistics player with leading presence in retail cash management (RCM) segment

Segmental breakup of Radiant :

Key drivers:

Growth in currency in circulation (CIC)
Growth in key retail touch points (organized retail market)
Growth in bank branches in semi-urban and rural areas
Efficiencies of outsourcing
High prevelance of Cash on delivery (COD) across cities, especially tier-2+
Increasing security requirements

Business Risks:

Penetration of card infrastructure in retail sector such as POS terminals which can bring down cash transactions
Rise of digital transactions such as UPI, wallets, cards etc. which can again bring down the cash transactions
Interest rate risk present although quite negligible
Credit risk present although quite negligible
Collection and liquidity risk present though very negligible
Related party transactions (approx. 20% of sales) is a monitorable
Loss/theft of cash is present though seems mitigated through insurance coverage and tie ups with senior police officials across the states
High client concentration - top 10 clients contribute 90% of the revenue in FY22 that is brought down to 81% in FY23. Having said that, there should be customer stickiness unless the company goofs up in a major way.
Increased competition if company diversifies into ATM cash management as part of its natural evolution although management does not have any such intention today

Corporate Governance:

No major red flags so far except that the related party transactions with handful of group companies is a monitorable. Transactions are seen in the form of loans, advances, leasing arrangements, contract charges and equity. The company does not have any subsidiary, associate/joint venture or holding companies. Chairman and MD Col. David Devasahayam and whole time director Dr. Renuka David are related to each other. Their son, Mr. Alexander David seems to be GM (operations), which could be a potential succession plan in the future. The company boasts of the board and management comprising of many ex- defence serviceman and retired IAS persons to bring in the required rigor, discipline and integrity. 21% of the total staff as of FY23 is ex-armed forces. Promoter holding stands at 56.92%.

IPO comments :

The IPO issue was largely an offer for sale from existing shareholder (PE firm: Ascent Capital Advisors India Private Limited) to the tune of 202.6 Cr of the total 256.64 Cr with fresh issue of 54 Cr towards funding WC requirements, CAPEX for purchase of specially fabricated armoured vans solely as an operational risk mitigation measure and general corporate purposes. From the concalls, the management seems shareholder friendly. The company aspires to maintain itself as a strong dividend paying company with good focus on ROCE and ROE. The dividend payout ratio for FY23 being 51%. This also indicates that the management is in no hurry to make hasty acquisitions in adjacenies and sees enough growth potential in existing lines of business, allowing it to retain/better it’s marketshare.

Marquee clients :

Leading banks of the likes of ICICI Bank, HDFC bank, Kotak, SBI, Axis, Bajaj Finance, Deutsche bank, Standard chartered etc.

Financials and Valuation:

Market Cap: 990 Cr
Div yield: 1.08%
D/E: 0.01 (largely short term working capital loans)
30 plus ROCE and ROE with 20 plus ROA (Asset turnover of 1.51)
5 year PAT CAGR: 66%
OPM maintained at around 24-28% in the last 5 years
Cumm CFO/PAT last 5 years: 1.09
Free cash flow seen with adequate cash in balance sheet
At 92.8 CMP (lower than IPO price band) available at a PE of 15.79 and a PEG of 0.25 with 4.31 PB

FIIs of the likes of Societe Generale and MOSL (Motilal Oswal) have taken a stake in the firm recently.

References:
Screener, Frost and Sullivan Assesment of Cash Logisitics Market in India, DRHP, Annual Reports, Investor Presentation and concall transcripts

P.S. This is not to be construed as buy/sell recommendation. Please do your own due deligence.

https://radiantcashservices.com/group-companies/

Industry-Report_Nov-2022.pdf (1.1 MB)
Annual-Report-2020-21-1.pdf (4.2 MB)
Annual-Report-2019-20-1.pdf (4.9 MB)
q4 fy23.pdf (2.3 MB)
q3 fy23.pdf (1.8 MB)
q4 fy23.pdf (688.0 KB)

adarshkumar · August 3, 2023, 2:01pm

Ive sent the followipng email to Radiant Cash’s management …I havent received a resonse yet.

"Dear Sir/Madam

I write this email to you, seeking clarity on the ’ Network Cash Management’ services provided by your company; of which Im an investor.

As I understand it, there is a risk of the said vertical/business being fragile in nature; as the concerns/risks flowing from money laundering or aid or abetment of money laundering can be huge, in such cases; especially when the transactions involve opening of multiple bank accounts and explaining the money trail. If you have followed the news on the ED going after the money transfer institutions in Kerala, you would know why this concern is huge.

I would like to know the Standard Operating procedure(s) followed by you, in this regard and the Management’s views on the justifiability of taking such huge risks, that open a can of worms on the regulatory side.

I would be glad if you could allay my concerns on this matter .I understand that the Management team has very high credibility, but I wanted to be sure that your cost benefit analysis on this vertical, factors in a possible structural risk to the existence of the business .

Yours Sincerely,

Adarsh "

iyeron · August 8, 2023, 5:43pm

Q1 FY24 results out. Progress seems okay.

q1 fy24.pdf (2.7 MB)

Press Release.pdf (363.9 KB)

Key points from concall: -

70% of nation’s pincode covered by Radiant
54000 retail outlets
Only 2% of the addressable retail mkt covered so far leaving a huge untapped opportunity
Q1 traditionally a weak qtr and with base effect of Q1 FY23, revenue growth seems subdued in Q1 FY24
Diamond, Bullion, Jewellery, (DBJ) to be under a separate CEO; Mgmt’s plan is to leverage existing infrastructure and help diversify to a very adjacent LOB with high growth potential
Drop in EBITDA due to increase in employee cost for DBJ business, significant acquisiton of cash vans, increase in cash execution cost coupled with low revenue in the current quarter; most of these expenses are one time expenses
DBJ expected to scale from Q3
10.7% YOY growth in cash handled
16 new clients, 43 end customers & 1552 new retail points however post rationalization points reduced to below 1000
Petroleum sector (pvt sector players) still to fully recover in the coming qtrs - also one of the reasons for subdued revenue growth
Organized retail growth has been 25% yoy
With investments made in 1st qtr, mgmt expects strong performance in FY24
Depth of penetration and large coverage of pincode acts as a natural deterrant for newcomers - it makes it easy for the large players such as Radiant to win contract from end clients within short time
Mgmt estimates 1.2 Cr retail outlets present but only 1.5 lakh of the 30-40% eligible outlets catered by the industry today – indicates extremely underpenetrated sector
4.1% of revenue from direct customers that is expected to grow significantly
Of the 6 players, there are only 2 large players likely to get most of the pie
Even today, not all banks avail this service. Large no. Of PSU banks yet to. Current wave seen with new age banks, SFB and other pvt banks after earlier wave of foreign banks
Radiant already has agreements in place with all major PSU banks but the volume is yet to pick up in these banks
DBJ to be largely offered to existing clients who are being offered cash services; natural alignment to exiting LOB (opportunity size: 10k out of 135k eligible in a growing market with only 2 players)
Order of revenue performance for the business from best to worst is Q3-Q4-Q2-Q1
Revenue growth is not impacted due to rationalization of the points
per point revenue = n/w cash mgmt + cash pickup mgmt; n/w cash management not offered as a standalone but always on top of cash pickup & delivery
Mgmt sees DBJ opportunity size to be even bigger than RCM; potential to offer separate and differentiated services to standalone jewellers to midsize to large players such as Caratlane. High operating leverage business similar to RCM business

Overall, management seems very bullish about the opportunites lying ahead.

iyeron · August 14, 2023, 7:26pm

Industry consolidation as anticipated - Cash mgmt business of Writer Safeguard acquired by Hitachi payments while Write corporation to focus on ATM managed services

Rahil_Dasani · September 16, 2023, 5:16am

MY TAKE ON RADIANT

INDUSTRY

The current internet penetration rate in India stands at 57% and this largely corresponds to the metro and semi-urban internet users. The majority of the population in rural areas lack basic network connectivity and hence do not have access to Digital banking/online payment systems. People in these areas rely predominantly on cash owing to a lack of network support for cashless transactions.
The top three players, of which Radiant is one, account for more than 75% of the total market share of the RCM market.
The RCM market was estimated at ₹ 6.8 billion in Fiscal 2021 and is projected to reach a market size of ₹ 20.4 Billion by Fiscal 2027, growing at a CAGR of 20.3%.
The growth in the organized retail sector as well as the corresponding outsourcing potential is expected to be prime factors for the development of the RCM market in India.
Cash utilization and circulation in tier 2 and tier 3+ towns and cities are expected to grow, on account of the government’s financial inclusion programs, including Pradhan Mantri Jan Dhan Yojana and other direct benefit transfers, provide direct benefits and subsidies to populations in semi-urban and rural areas.
The cash management services market has tremendous potential to be exploited in areas like retail cash management.

The country has over 30 million retailers, and only 10% of them are members of the organized sector, and approximately 15% of retailers in the organized sector use retail cash management services. As the unorganized sector exempts itself from consuming RCM services, the market for retail cash management is significantly underpenetrated in India as compared to advanced economies.

the outsourcing of cash management services is expected to also be driven by public sector banks increasingly outsourcing their cash-in-transit services to increase their productivity and reduce costs.
Despite the rise of digital transactions in developed countries, cash usage continues to rise, which is more typical of the market scenario in an emerging economy like India
is present in approximately 60,000 outlets today. As per industry estimates, the entire industry is picking up from less than 1.5 lakh outlets. But the potential market is huge with over 30 lakh outlets eligible to use this service.

THESIS

Very low float, hence if there happens to be some institutional interest it could rush up
This year there will be capex, otherwise they lease vehicles to grow Also there is sufficient opt leverage still available, so money should be given out as dividends later, mgmt also said they will be a strong dividend-paying company
The retail touchpoints are growing rapidly in TIER 1 and 2 because e-com, e-com, and e-com logistics are growing pretty rapidly in tier 1 and 2 first, and also after capturing tier 1, should go for tier 3 and 4, when that happens revenues from NCM will increase, and NCM being high margin will increase the overall margins

In e-commerce logistics, even in Tier 1 locations, 50% of the transactions are cash on delivery, and that goes up to 90% in Tier 4 locations. So that’s one of the key drivers.

In the cash logistics industry, a key marker of profitability is the ability to maximize the touch points per route, thereby maximizing the revenue derived from each trip while the overall costs for such routes remain largely constant. Thus, the ability to increase route density by adding more touchpoints will lead to operating leverage will lead to improved profitability from each route

As the % of direct clients increases, operating leverage should increase, as this will be like adding additional clients on the already developed road infrastructure, and so the fixed costs have already been incurred as volume increases margins flow to the bottom line.

DBJ- They have calculated the Jewelers at about 135000 and currently, this service is being offered only to about 10,000 of them. So it is again a very large market opportunity

are already doing cash management for 1000 of such outlets.
The largest player in the segment is functional out of some 83 locations. While Radiant already has a presence in over 6,000 locations across the country
The diamond, Bullion, and Jewelry, industry size is bigger than the RCMS segment.
Almost 60% - 70% of this segment is unorganized.
The DBJ touchpoints have not been added to the 1000-per-month touchpoint targets, which will further help increase the reach for the RCM segment too.
DBJ revenue is expected to scale up from Q3 onwards.
This quarter there was an increase in hiring for the above- vehicles, gunmen inc, and cash exec, so the overall cost increased,
That is why the margins were low, but should revert soon

Are adding direct clients every quarter, which should also help reduce client concentration a bit
An estimated 30 to 40 lakh outlets are eligible to use a service of this nature. But the entire industry is catering to 1.5 lakh outlets. So which means an extremely underpenetrated sector. As banks continue to offer this as a service to more and more end customers, they should continue to keep giving Radiant more points.
Network cash- NCM is high margin

Network cash management is more relevant where the banks do not have their branch presence.

Foreign banks have limited branch presence, so almost a substantial portion of their revenues go through Radiant’s account. So Radiant gets to charge for network cash management.

The share of foreign banks will be one of the levers. Foreign banks as a % of total revenues was 25% in FEB 23

Second is the share of Tier 3-plus revenues because the branch presence is low, against 61 bank branches per lakh population in urban areas, India has only 6 branches per lakh population in rural areas.

And third, obviously is the volume of cash because that is priced volumetric. The amount of cash that they deposit in their account is directly correlated there.

As a result of the increase in e-commerce penetration in tier 2 and tier 3+ towns and cities, e-commerce logistics companies are also expected to see resultant growth in volumes. In India, COD is the most popular way of payment for e-commerce retailers. COD accounted for more than 60 percent of all e-commerce payments in Fiscal 2022.

ANTITHESIS

The contracts they enter into with the customers do not contain price escalation clauses, and as a result, they are faced with risks concerning inflation.
As the capex and hiring for the DBJ segment has been done, if sales do not pick up Q3-4, opt leverage is a double-edged sword, radiant can be impacted
If cash volume reduces, ncm and cash processing directly take a hit, as here revenues are volume-based.
Payment options other than cash, including credit cards, debit cards, POS terminals, Stored value cards, UPI, and mobile payments have increased significantly in India in recent years, and a continued shift in consumer trends in India concerning the use of cashless payment methods could result in a significant reduction in the use of cash as a payment method.
The insurance claims below can also be rejected, or delayed, or the actual amount payable may be more than the insurance amount.

Future insurance premiums may increase significantly because of a high number of claims that they may make, or for any other reason such as increased risk perception of this industry by the insurers or re-insurers. Any such increase could harm their business.

Although this concentration is reducing every year
Since the overall cash management market is very lucrative and yielding, there is a risk of new players coming into the market, well-capitalized MNC players

abhikjha · September 16, 2023, 6:13am

I don’t think these kind of companies will exist in long term given the economy is moving into a cashless one. That’s the major risk. Any views by experts?

iyeron · September 16, 2023, 6:26am

Your post is more or less aligned to the original posted by me. Nevertheless, my comments on the antithesis is inline just to ward off concerns/worries, if any. Would not really call this as antithesis but more of risk to the business some of which is again an overlap with that in the original post.

The contracts they enter into with the customers do not contain price escalation clauses, and as a result, they are faced with risks concerning inflation

Mgmt did mention in the concall that they do have flexibility to revise prices to take care of inflation. They have done so in the past too.

As the capex and hiring for the DBJ segment has been done, if sales do not pick up Q3-4, opt leverage is a double-edged sword, radiant can be impacted

Operating leverage is always a double edged sword for any business. Per concall, Mgmt sees this as an opportunity and hence invested in the first quarter itself and expect contribution q3 onwards. Almost all jewellery companies have clocked healthy sales in the last few qtrs.

If cash volume reduces, ncm and cash processing directly take a hit, as here revenues are volume-based.

Don’t see this happening anywhere in near future. On the contrary, assured volume based transactions (even if not increasing qtr on qtr) makes it a repeatable business directly contributing to the bottom line (costs remaining constant).

Payment options other than cash, including credit cards, debit cards, POS terminals, Stored value cards, UPI, and mobile payments have increased significantly in India in recent years, and a continued shift in consumer trends in India concerning the use of cashless payment methods could result in a significant reduction in the use of cash as a payment method.

It’s a risk and needs to be watched. But having said that, India will certainly not become a cashless economy in a fortnight. Cash is still prevalent even in developed economies as you rightly pointed out.

The insurance claims below can also be rejected, or delayed, or the actual amount payable may be more than the insurance amount

.
It is always better to have insurance to mitigate the risk to a certain extent if not to a full extent rather than not having it at all. The loss due to theft etc is still much lower than that of the competitor.

Since the overall cash management market is very lucrative and yielding, there is a risk of new players coming into the market, well-capitalized MNC players

This is possible. The analogy to be seen is the logistics industry - companies of the likes of TCI XPS and see how many are actually profitable. The key strength of this business is its asset light nature, the geographic coverage and the operational efficiency with which it serves the repeated transactions qtr on qtr which is not so easy to replicate on the ground in a fortnight.

vx294 · September 28, 2023, 9:42am

I wanted to focus a bit more on the competitive landscape, primarily comparing CMS and Radiant:
Some rough figures that I put together:

The question I have is whether CMS Info Systems will beat Radiant Cash Management in the long run:

Technology: CMS Info Systems is clearly leading the technology battle in the cash logistics sector. Its the #1 company in AIoT remote monitoring services and #1 in ATM software solutions. Radiant does not look to be a player in this space, however it is easier for CMS to use this to cross-sell its other services like cash transit for banks.
DBJ: Radiant is currently expanding into the Diamonds, Bullion and jewelry (Radiant Valuable Logistics) transport services. They can use their existing RCM networks to onboard jewelers who are already their clients. The current largest player covers only around 83 locations, while Radiant already has touchpoints in 6000 locations. Cost will be per gram basis. Expected to contribute to revenue from Q3-Q4. One up on CMS.
Tier-3 city focus: Radiant is highly focused on the tier-3+ city expansion. 53% of their revenue comes from Tier3+ cities. More than 81% of India’s population is in tier 3+ cities. Here, economy is cash dominated (70%).
Banking trend: Banks usually don’t give 100% of their cash management to one company. It is split across multiple cash management companies for risk management and to cover more pin codes. Hence this could mean that both Radiant and CMS enjoy a good market share from banks in the coming future.

So what’s Radiant’s value proposition or differentiator against CMS? Looking for thoughts and inputs.

iyeron · September 28, 2023, 10:30am

Your above points 2 and 3 answers your question. Radiant is focused only on the “logistics” part thereby expanding to offer bullion, jewellery etc across the nation and across retail touch points in addition to the banks - 100% of revenue is through logistics business while CMS derives only around 60% of its revenues from logistics while remaining 40% through ATM & technology solutions.

TirthankarBanerjee · October 26, 2023, 6:10am

People who have invested into this stock, what is your take after yesterday’s result?

iyeron · October 26, 2023, 6:28am

Results are still awaited

sanchit_goel · October 26, 2023, 6:31am

CMS Infosystems had declared their results yesterday not Radiant

iyeron · November 7, 2023, 12:05pm

RCMS forays into fintech servies through acquisition of Acemoney to provide managed services including micro-ATM replenishment services for co-operative banks and societies in rural areas. Prima facie, results seem muted but would like to wait for investor presentation/concall.

iyeron · November 9, 2023, 12:36pm

https://www.bseindia.com/xml-data/corpfiling/AttachLive/8e511b79-ab80-42a2-bf66-1611a2b570d7.pdf

Some key points/comments basis the concall of Radiant and CMS:-

As per Radiant mgmt, the revenue de-growth this quarter is mainly because of change in price mechanism from fixed to volume-based for some nbfcs and retail customers and they expect q3 and q4 to be better - kind of expected considering the slowdown in rural economy but the volume based pricing seems a good move
Mgmt expects to clock around 20% topline growth yoy from fy25 onwards
With the low topline and some incremental costs for DBJ segment, the operating deleverage had its fair share in bringing down the margins
The cash movement has increased qoq (5%) and yoy. Also. no clients were lost due to pricing pressure, competition etc.
The recent acquisition of acemoney should bode well for Radiant strategically since it not only opens up serving co-operative societies and banks in the hinterlands but also helps leverage the phydigital and the BC model of operation (inline with the original philosophy of being asset light)
More importantly, with this partnership, I see Radiant getting into the world of neobanking (Bank As A Service) whereas CMS just remains as ATM As A Service as evidenced in its partnership with a Korean company for equipment manufacturing
Moreover, basis my personal experience with fintechs, I tend to agree with Radiant mgmt on the synergies possible across distribution and collection through the phydigital mode that should augur well to replicate Acemoney’s business across the nation
Furthermore, Rajiv (CMS) now looks to focus on retail cash management and also shift towards being more asset light - he wants to be selective in BLA segment and focus more on cash logistics and RMS segments, cites competition only in the cash transit business with growth opportunities in retail cash mgmt to lead in the coming years - largely volume based with some pricing

IMO this acquisition is a game changer for RCMS and is a better investment than CMS.

Arka · November 9, 2023, 6:34pm

Radiant Cash Management Services Limited (RCMS) Ventures into Fintech with Acemoney Acquisition

Overview: RCMS, a prominent financial entity, has unveiled its strategic move into the fintech domain through the acquisition of a majority stake in Acemoney, a leading Kochi-based fintech company. The Board of Directors at RCMS has granted approval for the definitive agreement, signaling the onset of a significant collaboration.

Acquisition Details:

Stake Acquisition: RCMS will acquire approximately 56.93% of Acemoney in an all-cash deal, positioning itself to harness the potential of digital transactions in Tier 3+ regions.
Strategic Value: Acemoney specializes in providing advanced digital banking solutions tailored for retail outlets, cooperative banks, and cooperative societies in rural areas. This expertise aligns with RCMS’s objective to offer an innovative “phygital” platform, seamlessly integrating cash and digital banking services.

Founders’ Vision:

Founders: Founded by Mr. Jimmin James Kurichiyil and Ms. Nimisha J. Vadakkan, Acemoney is on a mission to extend digital banking solutions to the vast rural population recently integrated into the banking system.
Retained Stake: Post-acquisition, the founders will retain a significant minority stake in Acemoney, actively contributing to the company’s rapid growth.

Strategic Positioning:

Growth Catalyst: Col. David Devasahayam, Chairman and Managing Director of RCMS, emphasizes the strategic fit of Acemoney, foreseeing substantial growth potential. The collaboration aims to capitalize on the surge in digital transactions across the nation.
Market Scope: With nearly 100,000 rural cooperatives and a large population transitioning from physical to digital banking, the partnership seeks to play a pivotal role in financial inclusion and unlock growth opportunities.

Raj_Ganesan · November 13, 2023, 7:00am

Sharing the latest interview by CMD Col.David Devasahayam. He mentioned that thru AceMoney acquisition, they are targeting to deploy 1 lakh micro ATMs in the next 2 years (with RBI subsidy). Rs.850 revenue per micro ATM/month = 8.5 Cr of additional revenue per month (Refer 3:14 in the video).

Adding a reference video on how micro ATMs work:

Disc: Invested

iyeron · December 3, 2023, 4:08pm

RCMS completes the acquisition of Acemoney:-

Gaurabh · December 13, 2023, 5:23pm

Nov24 : Concall summary

Financial Performance:

H1 FY24:

Revenue breakdown:
- BFSI: 21% growth
- Organized retail: Healthy growth
- Petroleum: 80% of past peak revenue
- E-commerce and Others: Churn in touchpoints and competitive pressure
Profit margin breakdown:
- Lower profitability in e-commerce and logistics
- Investments in DBJ and direct sales
- Churn in some touchpoints

FY24 (Full year target) :

Revenue:
- Expected to grow by 20% yoy
- Driven by consolidation of operations
- Focus on core business segments
- Investments in Acemoney and DBJ may contribute to growth in later quarters
EBIT:
- Expected to remain stable or grow slightly
- Investment in new ventures may impact EBIT in the short term
Profit:
- Expected to grow in line with revenue
- Margin pressure from investments may be offset by cost savings in other areas

FY25 and beyond:

Revenue:
- Long-term growth target of 20% per annum
- Expected to be driven by:
  - Strong performance in core business segments
  - Significant contribution from DBJ (20% of total revenue)
  - Potential for further growth in new ventures (Acemoney and fintech solutions)
EBIT:
- Expected to expand as a percentage of revenue
- Cost savings and operational efficiencies will contribute to margin improvement
Profit:
- Expected to grow at a faster rate than revenue
- Margin expansion will lead to higher profitability

Individual Business Lines:

Retail Cash Management:
- Expected to remain the largest contributor to revenue
- Growth driven by increasing demand for cash management services
- Focus on expanding service offerings and geographic reach
Cash Van Operations:
- Expected to see strong growth due to increasing demand for secure cash transportation
- Expansion of fleet size and service offerings will contribute to growth
DBJ:
- Expected to be a key driver of future growth
- Targeting a 20% share of total revenue by FY25
- Focus on expanding service offerings and geographic reach
Fintech Solutions:
- Expected to be a significant contributor to growth in the long term
- Acemoney acquisition provides a strong platform for growth
- Focus on developing new and innovative fintech solutions

Key Positive Points from Management Call:

Strong financial performance:
- Double-digit revenue growth despite challenging market conditions
- Demonstrated resilience and adaptability
Clear vision and strategy:
- Well-defined roadmap for future growth
- Diversification across multiple growth areas
Commitment to profitability and shareholder returns:
- Focus on cost efficiency and margin improvement
- Track record of delivering value to shareholders
Experienced and capable management team:
- Proven leadership in cash management industry
- Strong track record of success
Significant growth potential:
- Large and untapped market opportunities
- Strong brand name and reputation
- Innovative approach to new business ventures

rajatan · January 21, 2024, 7:53am

Even though plenty of cashless transactions are being done daily and likely to increase further which can be negative for the company, but their onboarding of DJB business will be a masterstroke, because this segment has hardly any cashless transaction! Cash rule the Diamond Jewlery, Bullion segment.

iyeron · January 21, 2024, 8:20am

Not just DBJ but also the acquisition of Acemoney - banks of the likes of HDFC bank are losing retail deposits and increasing cost of funds.