CMS Info Systems Limited — Q3 FY26 earnings call

Call held 13 Feb 2026

Management summary

CMS Info Systems reported a mixed Q3 FY26 with consolidated revenue of ₹618 crores, a 1.6% sequential growth, and EBITDA margins expanding by 160 bps to 25.5%. While the company secured a significant SBI cash RFP and saw strong growth in its tech and payments business, reported PBT declined due to one-off provisions and prior investments. Management expressed optimism for FY27, forecasting strong revenue growth and margin recovery, driven by execution of a robust order book and strategic M&A.

Highlights

  • Consolidated revenue of ₹618 crores, up 1.6% QoQ.

  • EBITDA margins expanded 160 bps QoQ to 25.5%.

  • Secured SBI cash RFP worth ₹1,000 crores over 10 years, with ₹500 crores incremental revenue.

  • Tech and payments business growing at 30% CAGR, targeting ₹400 crores in FY27.

  • Hawka business doubling from ₹100 crores to ₹200 crores level ARR.

Concerns

  • Reported PBT dropped from ₹95.6 crores in Q2 to ₹88.1 crores in Q3 due to one-off items.

  • One-time provision of ₹11.1 crores for new labor code in Q3.

  • Higher DSOs from midsized MSPs led to negative revenue impact in Q3.

  • Q2-Q3 margins adversely impacted due to investments ahead of delayed SBI contract and higher fleet costs/ECL provisions.

Key financials

2 periods

Headline

  • Consolidated Revenue
    ₹618 Cr
    QoQ +1.6%
  • Service Revenue
    —
    QoQ +4%
  • Business EBITDA
    ₹158 Cr
    QoQ +9%
  • EBITDA Margin
    25.5%
  • Reported PBT
    ₹88.1 Cr
    QoQ -7.8%
  • PAT (after exceptional items)
    ₹54.4 Cr
  • YTD Capex
    ₹275 Cr

Q3

  • Overall EBITDA Margin (normalized)
    24.5%

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

  • Managed Services & Technology
    ₹254 Cr Revenue₹78.5 Cr EBITDA
  • Cash Logistics
    6% EBITDA Growth170 bps Margin Expansion
  • Cash Management Services
    ₹384 Cr Revenue
  • Securens
    ₹18 Cr Revenue₹12 Cr Incremental Revenue (Q3)

Capital allocation

high confidence
  • Capex ₹300 Cr
    • Linked to execution of order book
    • Growth capex
    YTD capex is around INR 275 crores. While we have been conservative in capex for 2024 and 2025, this current spend is linked to the execution of around INR 1,600 crores order book that Rajiv mentioned. This is growth capex, not maintenance capex, and it is primary driver for the revenue visibility in FY 2027. So as we have given the guidance that our capex will be around INR 300 crores to INR 325 crores, and we have already spent INR 275 crores. We expect that we will in the range of INR 300 crores to INR 325 crores only.
  • M&A Securens Acquisition · Closed · Consideration ₹[object Object] (cash)

    Scaled Vision AI platform into a market leader

    Securens will have actually this year a negative PBT because we will be front-loading the depreciation on the assets.

    Earlier this year, on the back of having scaled our Vision AI platform into a market leader, we are able to make an accretive acquisition of a leading player, Securens. This was our first deal in the last 4 years. The investment here finally is INR 70 crores. Securens around INR 18 crores, Total revenue of INR 18 crores, so incremental revenue of around INR 12 crores in Q3. And Securens will have actually this year a negative PBT because we will be front-loading the depreciation on the assets.
  • M&A ATM management solutions business (from leading MSP) Acquisition · Signed · Consideration ₹[object Object] (undisclosed)

    Drive consolidation in the market, value accretive to CMS

    On February 11, a couple of days ago, we signed a term sheet for a business transfer agreement with a leading MSP to acquire their ATM management solutions business. The deal value here, we estimate to be in the range of INR 100 crores to INR 125 crores, and we aim to close this deal by March end. This is going to drive consolidation in the market and will also be value accretive to CMS.
  • Liquidity Cash ₹600 Cr
    I'm just asking for this. It's about INR600 crores.

Guidance & targets

Revenue

  • Overall Revenue Revenue · FY27 · High confidence ₹2,800-2,900 crores
    Overall revenue for FY 2027 should be in the INR 2,800 crores to INR 2,900 crores range.

    — Rajiv Kaul

  • Services Revenue Revenue · FY27 · High confidence ₹2,700-2,800 crores
    The services revenue component of this should be in the range of INR 2,700 crores to INR 2,800 crores, which was the target we set out when we met you in September 30.

    — Rajiv Kaul

Profitability

  • EBITDA Margin Profitability · FY27 · High confidence 25-26%
    This should further improve to 25% to 26% range for the FY 2027.

    — Pankaj Khandelwal

Business Growth

  • Tech & Payments Business Revenue Business Growth · FY27 · High confidence ₹400 crores
    Our tech and payments business is growing from INR 235 crores revenue to INR330 crores revenue in 1 year and is on track to hit INR 400 crores in FY 2027. This is a 30% CAGR.

    — Anush Raghavan

  • ATM Solutions Business Growth Business Growth · Next Year · Medium confidence 15-18%
    ATM solutions will be one complete business line where you'll see ATM cash, managed services, ground level ATMs, fixed price machines, all of that will be in one revenue bucket. We think that business overall should grow 15% to 18% next year.

    — Rajiv Kaul

  • Retail & Currency Logistics Business Growth Business Growth · Next Year · Medium confidence 12%
    The retail and currency logistics business should grow about 12-ish percent.

    — Rajiv Kaul

  • Tech & Payments (Hawka/Cards) Business Growth Business Growth · Next Year · Medium confidence 20%
    And our technology and payments business, which includes Hawkai and cards would, I think, grow about 20% for the next year.

    — Rajiv Kaul

Operational

  • ATM Count Operational · March/April · High confidence 74,000-75,000
    We are targeting an aggressive ramp-up to 74,000, 75,000 ATMs by the end of March or April.

    — Rajiv Kaul

Working Capital

  • DSO Normalization Working Capital · March end · High confidence Normal levels
    DSOs are getting streamlined and should be back to normal levels by end of March.

    — Anush Raghavan

Capex

  • FY26 Capex Capex · FY26 · High confidence ₹300-325 crores
    So as we have given the guidance that our capex will be around INR 300 crores to INR 325 crores, and we have already spent INR 275 crores. We expect that we will in the range of INR 300 crores to INR 325 crores only.

    — Pankaj Khandelwal

What to watch in Q4 FY26

DSO Normalization

By March end (Q4 FY26).
Current Streamlining, expected to normalize by March end.
Target DSOs back to normal levels.

Why it matters

Indicates improved working capital management and collection efficiency, crucial for services businesses.

DSOs are getting streamlined and should be back to normal levels by end of March.

Risks & concerns

  • Higher DSOs from midsized MSPs

    medium

    Due to credit tightening post AGS issue, led to negative revenue impact in Q3, but DSOs are streamlining.

    I would also like to provide you an update on the higher DSOs from a few midsized MSPs due to credit tightening by vendors post the AGS issue. We had alluded to this in our previous call. Since then, we have mitigated these risks to a large extent. We had made provisions in Q2. And in Q3, we took strong tactical actions, which included limiting services to ensure payment discipline. This has had a negative revenue impact, but was necessary to drive cash flow improvements. DSOs are getting streamlined and should be back to normal levels by end of March.

    Management acknowledged

  • Competitive intensity in transaction BLA RFPs

    medium

    Increased in FY24-25, leading CMS to sit out low-pricing RFPs to preserve capital and avoid low-quality growth.

    In FY 2022 to 2024, we have successfully achieved our 3 key operating goals and metrics on revenue growth, margin expansion and market share gains. FY '24 and '25 saw an increase in competitive intensity, and we sat out on most transaction BLA RFPs where the pricing was pretty low.

    Management acknowledged

  • SBI Contract Delay and related investment impact

    medium

    Investments made ahead of anticipated SBI contract (10,000 ATMs) proved aggressive due to subsequent delays, impacting Q2-Q3 margins.

    In hindsight, we invested ahead of this contract and our anticipation on things becoming normal was very aggressive given the subsequent delays to that RFP. This has been a big learning for us. ... I mean, if you want to summarize, our overall dip in EBITDA margins, I would just put them into 3 factors, about roughly about 1.5% impact in both wage inflation and the investments we made in building infrastructure for a contract, which took time to pan out.

    Management acknowledged

  • Wage inflation

    medium

    Linked to long-term wage settlements (3-4 year cycle), impacting margins.

    One was wage inflation linked to us signing long-term wage settlements. Earlier in the year, we talked about this in Q1. We have a 3- to 4-year cycle of signing wage settlements.

    Management acknowledged

  • New Labor Code Provision

    low

    One-time provision of ₹11.1 crores in Q3, impacting PAT.

    In Q3, we have also made onetime provision for new labour code of INR 11.1 crores, resulting in PAT after exceptional items for INR 54.4 crores.

    Management acknowledged

Q&A highlights

7 direct
FY27 Revenue Bridge and Certainty Direct
The INR 650 crores sort of a number, I think we have almost 95% certainty on this number. But we would want to wait to see where we end with March.

Clarifies the confidence level in the ambitious FY27 revenue guidance, distinguishing between contracted and aspirational growth.

Asked by Praveen Kumar

Retail Cash Management Strategy and Pruning Direct
I think the way I would phrase is, in the last 2 to 3 years, we've been fairly aggressive in this market from a market share perspective, right? ... I think it was very important for us to look back and optimize our network and look at what makes sense.

Addresses concerns about a potential shift in strategy from aggressive market share to profitability in a core segment, explaining the rationale for optimizing the network.

Asked by Praveen Kumar

Employee Benefit Expense Increase in Q3 Direct
So as I explained to you, there was a last quarter - in last quarter, there is a one-off item of around INR 12 crores, wherein we have reversed the provisioning for the ESOP as well as the performance-linked incentive provisioning. So that is an impact of around INR 12 crores reduction in the last quarter.

Provides crucial clarification on a significant cost item, explaining that the apparent increase was due to a prior quarter's one-off reversal, rather than a genuine rise in Q3.

Asked by Abhishek Chauhan

SBI Order Volume Discrepancy (10,000 vs 5,000 ATMs) Direct
But unfortunately, with that getting scrapped and then coming out with a new RFP, of that, we were the L1 participant. So we got about 5,000 of those volumes with rest going to other industry participants.

Clarifies the actual scope and competitive outcome of the major SBI ATM management contract, explaining why CMS secured fewer volumes than initially anticipated.

Asked by Krushi Parekh

Cash Management Services Degrowth and Outlook Direct
The delta between INR 415 crores, INR 417 crores to INR 385 crores, I think we've sort of explained in different ways. But fundamentally, it's a link of 2, 3 things. It is a dip in our overall business points or ATMs that we used to handle.

Addresses concerns about the performance of a core segment, attributing degrowth to specific operational factors and outlining expectations for improvement.

Asked by Akshat Hariya

Shift to Recyclers and Revenue Impact Direct
Now the number of visits might be lesser in certain cases, but that doesn't really change the nature of the revenues simply because the amount of work that still needs to be done, especially in an ATM, you only need to withdraw cash and load it. In a recycler, you might have to load it, you might have to evacuate it. There's a lot of reconciliation work that also needs to be done. So it's not as plain speaking as that.

Explains the strategic shift towards recyclers, clarifying that despite potentially fewer physical visits, the increased complexity and scope of work lead to higher revenue realization and value.

Asked by Divyansh Gupta

Buyback Plans and Capital Allocation Direct
We will be evaluating this in line with better clarity on our balance sheet and the needs of capital by the end of the year, and we'll update you accordingly. ... our priority is simple, organic, then inorganic and then returning capital to shareholders, whether that's through dividends or buybacks.

Provides insight into the company's capital allocation philosophy and the conditions under which a buyback might be considered, linking it to overall growth and M&A needs.

Asked by Shivam Parekh

3 min read 6 chapters

Detailed narrative

Q3 FY26 Performance and Margin Expansion

CMS Info Systems reported consolidated revenue of ₹618 crores for Q3 FY26, achieving a sequential growth of 1.6%. Despite this modest growth, the quality of revenue improved, with service revenue increasing by 4% quarter-on-quarter. Business EBITDA grew 9% QoQ to ₹158 crores, leading to a significant 160 basis points expansion in EBITDA margins, from 23.9% in Q2 to 25.5% in Q3. This margin improvement was primarily driven by strong performance in both Cash Logistics and Managed Services & Technology segments.

Strategic Business Segment Growth

The Managed Services & Technology segment demonstrated robust growth, with revenue increasing 18% QoQ from ₹216 crores to ₹254 crores, and EBITDA growing 12% to ₹78.5 crores. The tech and payments business, including the Hawka platform, is on a strong growth trajectory, aiming to reach ₹400 crores in revenue by FY27, representing a 30% CAGR. The Hawka business specifically is projected to double its ARR from ₹100 crores to ₹200 crores level, indicating successful productization and market penetration.

Impact of One-off Items and Operational Challenges

Reported PBT for Q3 FY26 saw a decline from ₹95.6 crores in Q2 to ₹88.1 crores, primarily due to specific one-off items. These included a ₹11.1 crores provision for a new labor code in Q3, and the absence of a one-time gain of ₹12 crores from provision reversal in Q2. The company also faced challenges from higher DSOs with midsized MSPs due to credit tightening, which had a negative impact on revenue, though DSOs are expected to normalize by March end.

FY27 Outlook and Growth Drivers

Management expressed strong confidence in the company's future trajectory, forecasting overall revenue for FY27 in the range of ₹2,800-2,900 crores, with services revenue contributing ₹2,700-2,800 crores. This growth is expected to be accompanied by a recovery in EBITDA margins to the 25-26% range for FY27. Key growth drivers include the full rollout of the SBI cash RFP, an anticipated increase in ATM count to 74,000-75,000 by March/April, and continued robust growth across all three restructured business platforms.

Capital Allocation and M&A Strategy

CMS Info Systems maintains a clear capital allocation strategy, prioritizing organic growth, followed by accretive M&A, and then shareholder returns. This quarter saw the acquisition of Securens for ₹70 crores, enhancing its Vision AI platform. Additionally, a term sheet was signed for an ATM management solutions business from a leading MSP, valued at ₹100-125 crores, with closure aimed for March end. The Board is also evaluating buybacks closer to year-end, considering the company's capital needs for ongoing growth and M&A opportunities.

Operational Optimization and Revenue Mix Diversification

The company is actively diversifying its revenue mix, with the contribution from its largest customer reducing from 22% to 18%, while private sector banks and direct-to-retail segments are increasing their share from 24% to 30%. Operational optimization efforts include pruning unprofitable retail points and scaling the gig operating model to over 2,000 partners, covering 20% of retail points. These initiatives are aimed at ensuring a healthier revenue base and improved profitability, moving towards a more agile and flexible network.

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