CMS Info Systems Limited — Q2 FY26 earnings call

Call held 6 Nov 2025

Management summary

CMS Info Systems faced a transitional Q2 FY26 with consolidated revenue declining 3% sequentially to INR 609 crores and PAT dropping 22% to INR 73 crores, impacted by subdued consumption, ATM network churn, and higher operating costs. Despite these headwinds, the Managed Services & Tech segment grew 5% sequentially, and the company secured a significant SBI contract. Management anticipates a strong H2 with sequential improvements in revenue and margins, driven by tech investments like HAWKAI and recovery in retail volumes.

Highlights

  • Overall revenue saw a growth of 1% year-on-year basis.

  • Managed Services & Tech revenue increased 5% sequentially from INR 258 crores to INR 271 crores.

  • HAWKAI remote monitoring platform is on track to reach 50,000 plus sites by the end of the year.

  • The SBI cash RFP has concluded, representing an incremental INR 500 crores opportunity over the next 10 years.

  • Retail business volumes recovered strongly in October with a 20% increase on a month-on-month basis.

Concerns

  • Consolidated revenue declined approximately 3% sequentially from INR 627 crores to INR 609 crores.

  • PAT for the quarter was INR 73 crores, reflecting a 22% decline compared to INR 94 crores in the previous quarter.

  • PAT margin contracted 280 basis points to 12.1% from the last quarter.

  • H1 FY26 PAT stood at INR 167 crores, compared to INR 182 crores in the same period last year, an 8% YoY decline.

  • A prudent provision of INR 10 crores was taken due to elongated payments from certain MSPs.

Key financials

2 periods

Headline

  • Consolidated Revenue
    ₹609 Cr
    YoY +1% QoQ -3%
  • PAT
    ₹73 Cr
    QoQ -22%
  • PAT Margin
    12.1%

H1

  • PAT
    ₹167 Cr
    YoY -8%

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

Share of Revenue
₹666 Cr Total
  • Cash Logistics ₹395 Cr 59.3%
  • Managed Services & Tech ₹271 Cr 40.7%

Capital allocation

high confidence
  • Capex ₹300 Cr
    • Tech investments
    • Projects under execution (WIPs CWIP) ₹1,400 Cr
    As projects go live this year for our tech investment, capex spend in H1 is INR175 crores. Full year estimate of around INR300 crores. You will remember, we had deferred and curtailed capex in last year FY '25. These are the projects under execution, like we have around INR1,400 crores of the project under execution. So these are the WIPs CWIP related to those projects which are under development.
  • Debt Debt disclosed
    Our cash balance remained strong at INR687 crores in line with last H1 despite higher capex, increased dividend payout and payout for the secured acquisition. We expect to return closer to our FY '25 price margin level by end of this fiscal year, supported by incremental revenue from new contracts and network cost optimization initiatives.
  • M&A Securens Acquisition · Closed
    The Securens acquisition has been closed and the teams are now working together on both the go-to-market and the synergy implications. Our cash balance remained strong at INR687 crores in line with last H1 despite higher capex, increased dividend payout and payout for the secured acquisition. We have acquired 1 company Securens in this period is related to that.
  • Liquidity Cash ₹687 Cr Cash balance remained strong despite higher capex, increased dividend payout, and acquisition payout.
    Our cash balance remained strong at INR687 crores in line with last H1 despite higher capex, increased dividend payout and payout for the secured acquisition.

Guidance & targets

ATM Count

  • ATM Count in Cash Business ATM Count · by March (FY26) · High confidence 74,000-75,000
    This gives us visibility of getting to 74,000 to 75,000 ATMs in our cash business by March of this fiscal year.

    — Anush Raghavan

ATM Pricing

  • ATM Cash Business Pricing Improvement ATM Pricing · by March (FY26) · High confidence 6%
    At CMS, we are also targeting a 6% improvement in pricing and realizations in our ATM cash business by March.

    — Anush Raghavan

Retail Points Coverage

  • Gig Operating Model Coverage Retail Points Coverage · by March (FY26) · High confidence 20%
    Our investments in gig operating model continues to scale very well and should expand to cover 20% of all retail points by March, strengthening both cost agility as well as rural reach.

    — Anush Raghavan

HAWKAI Sites

  • HAWKAI Sites HAWKAI Sites · by end of the year (FY26) · High confidence 50,000+
    On our HAWKAI remote monitoring platform, it continues to grow rapidly and is on track to reach 50,000 plus sites by the end of the year.

    — Puneet Bhirani

  • HAWKAI Sites HAWKAI Sites · by FY30 · High confidence 80,000
    This makes us confident of achieving our HAWKAI target of 80,000 sites by FY '30.

    — Puneet Bhirani

Revenue

  • SBI Cash Outsourcing Contract Revenue Revenue · over the next 10 years · High confidence INR 500 crores
    As this project goes to live status, revenue from this outsourcing contract is an incremental INR500 crores opportunity for us over the next 10 years.

    — Rajiv Kaul

Revenue Growth

  • ATM Management Solutions Business Growth Revenue Growth · in FY27 · Medium confidence double-digit growth
    With just these 2 contracts going live in H1, the ATM management solutions business should get back to growth in H2 and deliver double-digit growth in FY '27.

    — Rajiv Kaul

  • ATM Business Growth Revenue Growth · Medium confidence 8-10%
    So I think the volume growth may reduce in 5 years' time, but outsourcing from PSU banks and pricing should make up for it to keep continuing this at an 8% to 10% growth opportunity.

    — Rajiv Kaul

Services Revenue Growth

  • H2 FY26 Services Revenue Growth Services Revenue Growth · H2 FY26 · High confidence 9% (to INR 1,225 crores)
    From a key near-term metric, the H1 services revenue of INR1,125 crores should grow by 9% to INR1,225 crores in H2.

    — Rajiv Kaul

  • Overall FY26 Services Revenue Growth Services Revenue Growth · FY26 · High confidence 8%
    This will mean an overall FY '26 services revenue growth of 8%.

    — Rajiv Kaul

Services Revenue Target

  • FY27 Services Revenue Target Services Revenue Target · FY27 · High confidence INR 2,700-2,800 crores (15-19% growth)
    That run rate in H2 of annuity revenue will provide us with a very good base to hit our FY '27 services revenue target of INR2,700 crores to INR2,800 crores, which is a 15% to 19% growth.

    — Rajiv Kaul

HAWKAI Revenue

  • HAWKAI Revenue HAWKAI Revenue · in the next 2 years · Medium confidence INR 250 crores
    this business has gone from a size of INRO crores to INR100 crores in its first 3 years and is now likely to go to INR250 crores revenue in the next 2 years.

    — Rajiv Kaul

Revenue Mix

  • Technology Sector Revenue Share Revenue Mix · this year (FY26) · High confidence roughly 10%
    I think the overall technology sector, we're saying should contribute by this year to roughly 10% of revenue.

    — Rajiv Kaul

  • Technology Sector Revenue Share Revenue Mix · in the next 3 years · Medium confidence 15%
    If we get that going, I think the opportunity for it to hit 15% in the next 3 years is quite high.

    — Rajiv Kaul

What to watch in Q3 FY26

Sequential Revenue and Margin Improvement

Q3 and Q4 FY26
Current Q2 revenue declined 3% QoQ, PAT margin contracted 280 bps.
Target Sequential improvement in revenue and margins.

Why it matters

Management expects recovery in H2; verification of this trend is crucial for full-year performance and investor confidence.

In our retail business, volumes were softer during Q2, but recovered strongly in October with a 20% increase on a month-on-month basis... we expect sequential improvement in both revenue and margins through Q3 and Q4.

Risks & concerns

  • Subdued consumption and extended rains

    medium

    Affected rural income significantly, impacting Retail Solutions & Currency Logistics business in H1.

    Management acknowledged

  • ATM Management Solutions business transition and churn

    medium

    Impacted growth and profitability in H1 due to industry recalibration and rationalization of offsite ATMs.

    Management acknowledged

  • Inactive ATMs and revenue impact

    medium

    Approximately 4,000 ATMs were temporarily inactive, leading to a revenue impact of about INR 15 crores.

    Management acknowledged

  • Working capital stress and increased DSOs

    medium

    Post the AGS issue, banks reduced credit limits and exposure to certain MSPs, impacting working capital cycles and increasing DSOs.

    Management acknowledged

  • Provision for elongated payments

    medium

    A prudent provision of INR 10 crores was taken in Q2 due to elongated payments from certain MSPs.

    Management acknowledged

  • Increased people costs

    medium

    Due to long-term rate settlements in key regions, contributing to higher operating costs.

    Management acknowledged

  • Higher operating costs due to network maintenance

    medium

    Maintained full network while a large PSU bank cash outsourcing contract closure was pending, leading to lower network capacity utilization and temporary cost overhang.

    Management acknowledged

  • Lower realization from largest PSU bank customer

    medium

    Temporarily impacted profitability in Q2.

    Management acknowledged

  • Non-vesting of performance-linked ESOPs and incentives

    low

    Performance-linked ESOPs will not vest and incentive payments will not accrue to leadership for FY26 due to H1 performance, aligning rewards with business outcomes.

    Management acknowledged

  • Seasonally weak H1 for collections and DSO

    low

    H1 is typically weaker in terms of collection and DSO, contributing to lower operating cash flow.

    Management acknowledged

Q&A highlights

4 direct, 1 evasive
Incremental revenue from SBI RFP Direct
the INR500 crores that we're talking about is only purely reflective of the incremental revenue opportunity.

Clarifies that the INR 500 crores from the SBI contract is entirely new revenue, not a replacement, providing clarity on future revenue potential.

Asked by Baidik Sarkar

GIG model benefits and employee cost reduction Partial
The GIG serves as a very useful way to drive growth into some of these underpenetrated markets... to create a certain agility in creating service delivery models in places where our network perhaps doesn't exist or the density of business points do not justify a large fixed cost network operations.

Explains the strategic rationale and operational flexibility of the GIG model for market expansion and cost efficiency in new areas.

Asked by Baidik Sarkar

Employee cost reduction and one-off nature Direct
I think the employee cost reduction which you're seeing in Q2, especially linked to the 2 things we talked about are one-off. And therefore, they won't obviously be you won't see that in Q3 or Q4.

Clarifies that the Q2 employee cost reduction is a one-time event, indicating potential for higher employee costs in subsequent quarters and impacting margin outlook.

Asked by Baidik Sarkar

Quantitative impact of cost optimization on PAT/EBIT Evasive
Baidik, I don't know the answer to that question right now. I think we don't have we also will not be able to forecast Q3, Q4 line-by-line costs right now. We'll tell you end of Q3, but I think our goal is to make sure that our EBIT and PAT margins are trending back to normal by the end of the year.

Management avoids giving specific quantitative guidance on margin recovery for Q3/Q4, making it harder for analysts to model future profitability.

Asked by Baidik Sarkar

INR 10 crores provision and aging of receivables Partial
Baidik, 6 to 9 months would be the pool of time if you're talking about... This INR10 crores is basically between Q2 and Q3... And largely, it -- largely is because of the MSP, the additional...

Analyst pushes for specific aging details on the provisioned amount, but management gives a broad range, indicating potential for continued working capital stress.

Asked by Baidik Sarkar

Profitability profile of different segments (ATM cash, retail cash, tech solutions) Partial
I think for us, every business, if you look at our overall 25% ROCE, I think there will be some business a little higher, some a little lower. But our overall aim is to create these 3 platforms, which can self-fund the growth and therefore, need to have and sustain good good margin profile and good return metrics.

Management acknowledges different profitability but avoids giving specific segment-wise margin metrics, citing integrated network operations, which limits granular analysis.

Asked by Vikrant Bandekar

Reasons for ATM shutdowns and future of ATM business Direct
Post the AGS situation, many private sector banks, both used it as an opportunity, also looking at overall ATMs, which weren't contributing meaningfully in terms of transactions, they prune those estates down.

Explains the industry-wide rationalization of offsite ATMs by private banks, impacting CMS's volumes, and highlights the shift towards recyclers and on-site ATMs.

Asked by Krushi Parekh

Utilization of AI in operations Direct
AI, we started with extensive machine learning and AI use for our HAWKAI platform, which is our remote modeling solution... That learning is now powering into our core operations... where we go, what we pick up, how much we pick up, what's going on, how do we keep changing our routes dynamically basis either seasonality or demand is all being we are investing in machine learning with algorithms to help us drive the next level of operational framework.

Details how AI is being integrated beyond HAWKAI into core logistics operations for efficiency and route optimization, signaling a strategic focus on technology.

Asked by S.K. Devnath

3 min read 6 chapters

Detailed narrative

Q2 FY26 Financial Performance Overview

CMS Info Systems reported a consolidated revenue of INR 609 crores for Q2 FY26, marking a sequential decline of approximately 3% from INR 627 crores in Q1 FY26, though showing a 1% YoY growth overall. Profit After Tax (PAT) stood at INR 73 crores, reflecting a 22% sequential decline from INR 94 crores in the previous quarter. The PAT margin contracted by 280 basis points to 12.1%. For the first half of FY26, PAT was INR 167 crores, an 8% decrease compared to INR 182 crores in H1 FY25.

Segmental Performance and Operational Challenges

The Managed Services & Tech segment demonstrated resilience, growing 5% sequentially to INR 271 crores, and an 18% YoY growth in H1. Conversely, the Cash Logistics business experienced a 5% sequential drop in volume, contributing INR 395 crores, primarily due to temporary inactivity of about 4,000 ATMs. This inactivity, coupled with weaker ATM transaction volumes, led to a revenue impact of INR 15 crores. The company also took a prudent provision of INR 10 crores due to elongated payments from certain MSPs, impacting profitability.

Cost Structure and Margin Pressures

The quarter was characterized by higher operating costs, partly due to maintaining a full network while awaiting the closure of a large PSU bank contract, which resulted in lower network capacity utilization. Increased people costs from long-term rate settlements also contributed to margin pressure. These factors, combined with temporarily lower realizations from a major PSU bank customer, impacted EBIT and led to the observed PAT margin contraction.

Strategic Growth in Tech Solutions (HAWKAI)

CMS is aggressively investing in its HAWKAI tech platform, which is on track to reach over 50,000 sites by year-end, up from 30,000 sites at the beginning of FY26, and targets 80,000 sites by FY30. This platform is a key growth driver, with the technology sector projected to contribute roughly 10% of overall revenue this year and potentially 15% within three years. The recent closure of the Securens acquisition further enhances the company's tech solutions portfolio.

ATM Business Outlook and Industry Dynamics

The ATM management solutions business is expected to return to growth in H2 FY26 and achieve double-digit growth in FY27, bolstered by new contracts. A significant SBI cash outsourcing RFP, once live, is projected to generate an incremental INR 500 crores over 10 years. The company aims to increase its ATM count to 74,000-75,000 by March and target a 6% improvement in pricing and realizations in the ATM cash business by the same period, indicating improving pricing discipline in the ecosystem.

H2 FY26 and FY27 Outlook

Management anticipates a strong H2 FY26, with services revenue projected to grow 9% sequentially from INR 1,125 crores to INR 1,225 crores, leading to an overall FY26 services revenue growth of 8%. This H2 performance is expected to provide a robust base for FY27, with a services revenue target of INR 2,700-2,800 crores, representing 15-19% growth. October has already shown strong recovery in retail volumes, up 20% month-on-month, signaling positive momentum for the second half.

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