How to Make 15% Returns in 9 Months with CMS Info Systems Ltd

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CMS Info Systems Ltd: A Cash Management Leader with Strong Growth Potential


CMS Info Systems Ltd is one of the leading cash management companies in India, offering a range of solutions for ATM and retail cash management, banking automation, card personalization and remote monitoring. The company has a strong presence across the country, serving over 133,000 business points every day. CMS Info Systems Ltd is backed by Baring Private Equity Asia, which acquired 100% stake in the company in 2015.

Business Overview

CMS Info Systems Ltd operates in four segments:

  • ATM Cash Management: The company manages the entire cash cycle for banks, from currency chest to ATM replenishment and maintenance. The company has over 55,000 ATMs under its management, making it the largest ATM cash logistics company in India.
  • Retail Cash Management: The company provides cash pick-up and delivery services for retailers, e-commerce players, telecom operators and other businesses. The company handles over Rs 5,000 crore of cash every day for its retail customers.
  • Banking Automation: The company supplies, installs and maintains ATM and cash deposit machines for banks. The company also provides multi-vendor software solutions for ATM network management and remote monitoring.
  • Card Personalization: The company offers card personalization and fulfillment services for banks, financial institutions and government agencies. The company has the capacity to produce over 100 million cards per year.

Financial Performance

CMS Info Systems Ltd has delivered consistent growth in revenue and net profit over the past few years. The company’s financial performance for the last four quarters is summarized in the table below:

Source: Company filings

The company’s annual revenue and net profit for the last three fiscal years are shown in the chart below:
Source: Company filings

The company’s revenue and net profit growth have outperformed its sector averages for both the last fiscal year and the last quarter. The company’s sector averages are based on the performance of its peers such as SIS India Ltd, Writer Corporation Pvt Ltd and Securevalue India Ltd1.

The company’s stock price has also appreciated significantly in the past year, rising by 50.7% from Rs 224.35 on June 18, 2022 to Rs 338 on June 18, 2023. The company’s stock price has outperformed its sector by 15.1% in the same period.

The company’s valuation metrics are also attractive compared to its sector peers. The company’s price to earnings ratio (PE) is 17.6, lower than its sector PE of 24.5. The company’s debt to equity ratio (D/E) is zero, as it is a debt-free company.

Growth Drivers

CMS Info Systems Ltd has several growth drivers that can help it sustain its momentum in the future. Some of these are:

  • Increasing demand for cash management services: Despite the growth of digital payments, cash remains a dominant mode of transaction in India, especially in rural areas and small towns. According to a report by RBI, the currency in circulation in India increased by 17% year-on-year to Rs 28.6 lakh crore as of March 31, 20212. This creates a huge opportunity for cash management companies like CMS Info Systems Ltd to provide efficient and secure cash handling services for banks and businesses.
  • Expanding customer base and service offerings: CMS Info Systems Ltd has a diversified customer base across various sectors such as banking, retail, e-commerce, telecom, government and others. The company has also expanded its service offerings to include new solutions such as ALGO OTC, a platform that enables over-the-counter cash transactions for customers without bank accounts, and CMS Pay, a digital payment solution for retailers. These initiatives can help the company tap into new segments and increase its revenue streams.
  • Leveraging technology and innovation: CMS Info Systems Ltd has invested in technology and innovation to enhance its operational efficiency and customer satisfaction. The company has deployed artificial intelligence, machine learning, blockchain and cloud computing to optimize its cash forecasting, routing, replenishment and monitoring processes. The company has also developed proprietary software solutions for ATM network management and remote monitoring that can reduce downtime and improve service quality.

Conclusion

CMS Info Systems Ltd is a leading cash management company in India that has delivered strong growth in revenue and net profit over the past few years. The company has a diversified customer base, a wide service portfolio, a robust operational network and a debt-free balance sheet. The company also has several growth drivers that can help it maintain its momentum in the future, such as increasing demand for cash management services, expanding customer base and service offerings, and leveraging technology and innovation. Based on these factors, the company’s stock price can potentially reach targets of 365 to 390 in the next 3 to 9 months, implying a return of 8% to 15% from the current level of 338. Investors looking for a stable and profitable company in the cash management sector can consider CMS Info Systems Ltd as a good investment option.



Disclaimer: The information provided in this blog post is for general informational purposes only. It is not intended to be financial, legal, or professional advice. The opinions expressed are solely those of the author and do not necessarily reflect the views of CMS Info Systems Ltd or its affiliates. The author and CMS Info Systems Ltd make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability of the information contained in this blog post. Any reliance you place on such information is strictly at your own risk. In no event will the author or CMS Info Systems Ltd be liable for any loss or damage arising from or in connection with the use of this blog post or any links to external websites. Please consult a qualified professional before making any financial or legal decisions based on the information in this blog post.

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