CMS Info Systems Limited — Q1 FY26 earnings call

Call held 24 Jul 2025

Management summary

CMS Info Systems reported a resilient Q1 FY26 with 5% YoY revenue growth to INR 627 crores and 3% YoY PAT growth to INR 93.6 crores, despite a challenging macro environment and industry-specific headwinds like ATM transaction dips and wage hikes. The company expanded its cash logistics footprint and secured INR 500 crores in new orders. A significant development was the acquisition of Securens Systems Private Limited for approximately INR 80 crores, aimed at scaling its AI vision business and enhancing its tech stack.

Highlights

  • Consolidated revenue grew 5% YoY to INR 627 crores despite a seasonally weak quarter.

  • PAT increased 3% YoY to INR 93.6 crores.

  • Cash logistics footprint expanded by 9% YoY to 153,000 business touch points.

  • Secured INR 500 crores in new order wins, including a multi-year multi-vendor software contract.

  • Acquired Securens Systems Private Limited for approximately INR 80 crores EV, aligning with M&A strategy.

  • ATM cash market share increased to 58-60% amidst industry volatility.

Concerns

  • Q1 was seasonally weak, impacted by geopolitical issues and muted consumption, leading to a 10% dip in India ATM transactions.

  • Wage increases and long-term union agreements increased Q1 costs, impacting margins.

  • AGS-related ATM shutdowns and liquidity issues in the sector impacted ATM install base and deployment.

  • SBI cancelled an RFP for 10,000 ATMs, which CMS was the only qualified bidder, delaying expected revenue.

  • Managed services EBITDA declined from INR 36 crores to INR 33 crores due to project execution and ramp-up time.

Key financials

  1. Consolidated Revenue ₹627 Cr +5%YoY
  2. PAT ₹93.6 Cr +3%YoY
  3. Total EBITDA ₹159 Cr +3%YoY
  4. EBIT ₹113 Cr 0%YoY

What they filed

Q1 FY27: revenue up 1.3%, net profit down 10.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue625 581 619 627 609 −3%618 +6%633 +2%635 +1%
EBITDA153 159 162 158 137 −10%140 −12%161 −1%169 +7%
Net profit91 93 98 94 73 −20%57 −39%79 −19%84 −11%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Cash Logistics
    ₹417 Cr Revenue
  • Managed Services
    ₹258 Cr Revenue₹33 Cr EBITDA
  • Card Services
    -23% Revenue Growth

Capital allocation

high confidence
  • Capex ₹250 Cr Cut — Revised guidance from INR 300-325 crores to INR 250-300 crores

    Previously planned ₹300 Cr

    Our current capex guidance for the year stands as INR250 crores to INR300 crores versus the initial guidance of INR300 crores to INR325 crores.
  • M&A Securens Systems Private Limited Acquisition · Signed · Consideration ₹80 Cr

    Pioneer in AIoT remote monitoring, strong reputation, helps scale AI vision business, expand client base, enhance tech stack for BFSI and retail. Aligns with M&A philosophy of 10X FY25 adjusted EBITDA and estimated 4X on post synergy basis.

    Estimated 4X on post synergy basis. At EBITDA level, Securens has always been positive. Merging will result in better overall metrics.

    We are pleased to announce a binding agreement to acquire Securens Systems Private Limited, a pioneer in the AIOT remote monitoring space with a strong reputation built over years of investment in tech capabilities. ... We won this deal against other strategic bidders and an enterprise value of approximately INR80 crores, and this type of deal is a win-win and align perfectly with our M&A philosophy valued at approximately 10X FY 2025 adjusted EBITDA and estimated 4X on a post synergy basis, this will help us scale our vision Al business, expand our client base, and enhance our tech stack for intelligence surveillance and productive analytics across BFSI and retail.
  • Liquidity Cash ₹1,000 Cr Strong FCF and balance sheet strength of over INR1,000 crores.
    In our last call, we had highlighted our strong FCF and our balance sheet strength of over INR1,000 crores.

Guidance & targets

Revenue

  • Services Business Revenue Growth Revenue · next couple of years · High confidence 13-14%
    But I think we have a healthy pipeline to go focus on executing to regenerate the growth aspiration which is set in our services business of 13% to 14% for the next couple of years. That's what we are we are focusing on targeting right now.

    — Rajiv Kaul

  • Retail Sector Revenue Growth Revenue · Medium confidence 12-14%

    Previously 10-12% → 12-14%

    I feel that our market share and competitiveness, we are at the forefront. We would think that with formalization and GDP growth, we would like to target growing at double digits in these businesses. I think we've alluded to 10% to 12%. And then whether sometimes you get market share gain or you get operating leverage leading to an EPS growth, which is better, that's where we come up to, trying to grow the 12% to 14% or 13% to 14% range.

    — Rajiv Kaul

Market Share

  • ATM Cash Market Share Market Share · current · High confidence 58-60%
    Our ATM cash market share has increased to 58% to 60%, reflecting our stability amidst the volatility and churn that we witnessed.

    — Anush Raghavan

  • AIoT Remote Monitoring Sites Market Share · midterm · Medium confidence 100,000 sites

    Previously 25,000-30,000 sites → 100,000 sites

    We were roughly at 25,000 to 30,000 sites we have a midterm goal to 100,000 sites.

    — Rajiv Kaul

Order Book

  • Order Book Pending Execution Order Book · High confidence 1400 crores
    I think there's roughly about INR1,400 crores of order book which is pending to be executed.

    — Rajiv Kaul

Revenue Mix

  • Transaction-Linked BLA Revenue Contribution Revenue Mix · current · High confidence <10%
    I don't know the specifics of it right now, but the transaction link BLA is now less than 10%. It must be 8% to 9% or 8% roughly, yes.

    — Rajiv Kaul

What to watch in Q2 FY26

ATM Transaction Recovery

H2 FY26
Current 10% dip in Q1 FY26
Target Recovery and normalization

Why it matters

ATM transactions directly impact variable billing in cash management, a core business segment.

In a seasonally weak quarter marked by geopolitical issues and muted consumption. We delivered a consolidated revenue of INR627 crores, up 5% year-on-year, and a PAT of INR93.6 crores, which is a 3% growth. The above mentioned issues resulted in a 10% dip in India ATM transactions at an aggregate level and also impacted the variable billing in our retail cash management business.

Risks & concerns

  • AGS-related ATM shutdowns and sector liquidity issues

    high

    Caused a 10% dip in India ATM transactions, impacted ATM install base, and affected liquidity/credit for small/mid-sized MSPs.

    Management acknowledged

  • Geopolitical issues and muted consumption

    medium

    Impacted Q1 performance, leading to a 10% dip in India ATM transactions and affecting variable billing.

    Management acknowledged

  • Increased Q1 costs from wage hikes and union agreements

    medium

    Impacted Q1 margins, but expected to normalize over the year through productivity gains and pricing.

    Management acknowledged

  • SBI RFP cancellation and re-floating

    medium

    SBI cancelled an RFP for 10,000 ATMs where CMS was the only qualified bidder, delaying expected contract go-live to H2.

    Management acknowledged

  • Chinese camera restrictions

    medium

    Caused stress in the system, but it's a transitory phase with certifications underway, and customers are aware.

    Management downplayed

  • Cyclicality and seasonality of Indian economy

    low

    Q1 is typically a weaker quarter due to agri seasons and broader consumption patterns, but expected to improve.

    Management acknowledged

Q&A highlights

6 direct, 1 evasive
Margin compression in Cash and Managed Services Direct
Q1 has been softer in the cash business, specifically if you think of the wage hike impact in Q1 will have a dip in margins. ... In terms of the managed service business at a high level, there is straightaway an operating margin impact from the dip in transactions.

Analyst questioned significant margin decline; management attributed it to Q1 wage hikes and transaction dip, expecting normalization.

Asked by Hitesh Arora

Status of 7,000 AGS-owned ATMs and CMS's market share gain Direct
As far as the non-BLA ATMs were concerned, I think as we had updated in our earlier calls as well, we've been extending help along with the broader industry in helping banks with the transition. So, we've been able to get our market share, if not slightly more than that in terms of success in some of these contracts.

Clarified how CMS is benefiting from the AGS situation by gaining market share in the transition of non-BLA ATMs.

Asked by Balaji

Synergies and valuation of Securens acquisition Partial
When you take the two entities together, we will have a business operating at roughly about 45,000 sites live on whenever the transaction concludes. As that productivity will change and improve, we will save significantly on any common overhead infrastructure cost.

Analyst sought details on 4x post-synergy EBITDA; management highlighted productivity gains from combined scale and overhead savings.

Asked by Balaji

Levers to regain margins after Q1 wage hikes Direct
Generally we will tend to see that Q1 starts off a little weak and through the year we sort of normalize closer to our margin overall margin profiles. ... It helps to drive operating leverage and productivity.

Addressed concerns about margin recovery, explaining Q1 is cyclically weak due to provisions and that operating leverage will improve margins over the year.

Asked by Krushi Parekh

Rationale for Securens acquisition and strategic fit Direct
I think our approach is always to think about looking at majority control or full control of company in a sector which we already understand very well with. Securens particularly was relevant to us simply because it's one of the key players... It's among the top five players in the space.

Explained the strategic rationale for acquiring Securens, emphasizing sector expertise, market leadership, and the goal of dominating the AIoT remote monitoring space.

Asked by Prithvish Uppal

Impact of Chinese camera restrictions on new orders and future outlook Direct
The industry understands this. Customers are aware of the challenge. And now more and more cameras are getting certified, and it's a transitory phase, which will get over very soon.

Addressed concerns about potential delays in new orders due to regulatory restrictions on Chinese cameras, indicating it's a temporary issue with certifications underway.

Asked by Divyansh Gupta

SBI tender cancellation and implications for CMS Evasive
I don't think we of all people can comment on a process run by a large bank in the country. I think we'll wait for the process to pan out and see how it goes.

Analyst questioned the impact of SBI cancelling an RFP where CMS was the sole qualified bidder; management declined to comment on the bank's process.

Asked by Divyansh Gupta

Fixed price vs. transaction-based pricing model for banks Direct
I think the main thing has changed in the industry is, the entry of Brown Label ATM was sort of driven on the fact that, listen, there is an opportunity between what the interchanges versus what the cost of doing the services. ... banks have realized that ATM is still an extremely important channel of customer service... And hence, I've realized that it's always better to then invest in a fixed price outcome.

Provided insight into why banks are shifting from transaction-based to fixed-price contracts, citing changing economics, digital payments, and the importance of service quality.

Asked by Raj Gopal Ramanathan

3 min read 6 chapters

Detailed narrative

Q1 FY26 Performance Overview Amidst Macro Headwinds

CMS Info Systems reported a consolidated revenue of INR 627 crores, marking a 5% year-on-year increase, and a PAT of INR 93.6 crores, a 3% year-on-year growth for Q1 FY26. This performance occurred in a seasonally weak quarter characterized by geopolitical issues and muted consumption, which led to a 10% dip in India ATM transactions and impacted variable billing in retail cash management. Management estimated a revenue impact of INR 8-10 crores in Q1 due to these factors, alongside increased costs from wage hikes and union agreements.

Strategic Acquisition of Securens Systems Private Limited

A key highlight of the quarter was the binding agreement to acquire Securens Systems Private Limited for an enterprise value of approximately INR 80 crores. This acquisition aligns with CMS's M&A philosophy, targeting a 10X FY25 adjusted EBITDA and an estimated 4X on a post-synergy basis. Securens, a pioneer in AIoT remote monitoring, is expected to help CMS scale its AI vision business, expand its client base, and enhance its tech stack across BFSI and retail sectors. Management noted that Securens has historically been EBITDA positive, and the merger is anticipated to improve overall metrics.

Cash Logistics and Managed Services Performance

Both the cash logistics and managed services segments reported an 8% year-on-year revenue growth, scaling to INR 417 crores and INR 258 crores, respectively. Despite this growth, total EBITDA grew by a modest 3% year-on-year to INR 159 crores, while EBIT remained flat at INR 113 crores. The managed services segment saw its EBITDA dip from INR 36 crores to INR 33 crores, primarily due to project execution timelines and ramp-up costs. The company's ATM cash market share increased to 58-60% amidst industry volatility.

ATM Industry Challenges and Strategic Shifts

The ATM industry faced significant challenges, including the shutdown of nearly 50% of AGS's 20,000 brown label ATMs, impacting liquidity and credit availability. A slowdown in consumption also weighed on ATM transactions. Notably, SBI cancelled an RFP for 10,000 ATMs, for which CMS was the sole qualified bidder, delaying the expected go-live to H2 FY26. CMS is strategically pivoting away from transaction-price BLA contracts towards fixed-price contracts, securing INR 500 crores in new orders that include fixed-price BLA, Algo software, and card payments, with no transaction-linked BLA revenues.

Capital Allocation and Growth Outlook

CMS revised its capex guidance for FY26 downwards to INR 250-300 crores from the initial INR 300-325 crores. The company maintains a robust balance sheet with over INR 1,000 crores in strength. Management reiterated its focus on disciplined growth, prioritizing contracts that offer predictability and scale. The services business has a growth aspiration of 13-14% for the next couple of years, and the company aims to grow its retail sector revenue in the 12-14% range. The current order book pending execution stands at approximately INR 1,400 crores.

Margin Outlook and Operational Efficiency

Management acknowledged that Q1 margins were impacted by wage hikes and the dip in ATM transactions. However, they expect margins to normalize over the year through productivity gains and pricing adjustments. The company emphasized its culture of investing in technology to drive operating leverage and its focus on customer-centricity and agility. The leadership team has been reorganized to enhance accountability and operational efficiency across various teams, with Anush Raghavan as Chief Business Officer and Puneet Bhirani as Chief Operations Officer.

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