CMS Info Systems: Future-Driven Growth with 13–15% CAGR & 20-Year EPS Multipliers

1. Overview

CMS Info Systems Limited – a market leader in cash logistics and managed services – is undergoing a technology‐driven transformation. With robust financial metrics and an expanding order book, the company is well positioned to capitalize on industry consolidation and new revenue streams, including AIoT-based remote monitoring and non‐BFSI initiatives.

2. Q3 FY2025 Results

Revenue & Profitability

Segment Performance

Operational Highlights

• Order book execution improved significantly—from 15% in H1 to 30% in Q3—with a target of 60% by Q4.
• The company recorded its highest-ever cash volume in Q3, with a 6% YoY increase and a 10% overall business point addition.

3. Growth Plans & Strategic Initiatives

Revenue Expansion

Targeting midterm revenue CAGR of 13%–15% through a balanced portfolio:

• Cash Logistics expected to grow at 10%–13%.
• Managed Services & Technology solutions poised for 15%+ growth.
• AIoT Remote Monitoring to compound at 15%–20%.

Product & Market Diversification

Continued focus on deepening retail and quick-commerce engagements alongside traditional BFSI offerings.

Cross-selling opportunities leveraging an integrated service stack are being actively pursued.

Future Order Book & Execution

The execution of a large PSU order book, though delayed by testing and handover issues, is expected to lift FY26 service revenue growth to 15%+.

4. Capital Expenditure & Technology Investment

CAPEX Outlook

Q3 CAPEX stood at INR 50 Cr., with full-year projections in the range of INR 150–200 Cr.

Majority of the CAPEX is directed towards scaling Managed Services (order execution ramp-up) and AIoT/RMS capabilities.

Strategic Rationale

Increased tech spending from 1% to 1.5% of revenue supports superior service quality, automation, and enhanced risk management, positioning CMS for sustained margin improvement.

5. Future Financial Projections & Return Estimates

Assuming an organic revenue CAGR between 13% and 15% and maintenance of current margins and valuation multiples:

EPS Multipliers (Approximate)

These figures suggest robust long-term potential if the company successfully converts order wins into recurring revenue and continues to execute its strategic initiatives.

6. Competitive Landscape & Risks

Industry Dynamics

The cash logistics sector is witnessing consolidation. CMS is benefiting from competitors’ operational disruptions, particularly in ATM management, as banks transition to stronger, tech-enabled providers.

Risks

• Execution Delays: Ongoing delays in PSU order book execution may pressure short-term revenue.
• Margin Pressures: Risks from pricing adjustments in outsourcing contracts and potential fluctuations in technology costs.
• Operational Risks: Inherent risks in cash management (e.g., reconciliation issues, theft, and process delays) remain, though mitigated by enhanced risk management protocols.

Strategic Mitigation

A conservative capital allocation strategy with low debt (₹186 Cr.) and strong reserves (₹1,939 Cr.) underpins the company’s ability to weather short-term headwinds.

7. Valuation Estimate & Investment Thesis

Valuation

With a current Stock P/E of 20.1, ROE of 19.4%, and ROCE of 27%, CMS is trading at attractive levels relative to its growth prospects.

The strong balance sheet, low leverage, and disciplined CAPEX make the current market cap of ₹7,362 Cr. compelling for value-oriented investors.

Investment Thesis

Outlook

Long-term returns are projected to be attractive, with EPS multipliers potentially growing 2x–16x over 5–20 years, assuming sustained CAGR in the range of 13%–15% and steady valuation multiples.

8. Key Financial Metrics