Which Other Revenue Streams Are Driving Growth Apart from Its ATM Business?

Synopsis: The company CMS Info Systems is increasingly diversifying itself by introducing its technology-based products and services along with its existing ATM services, thus offering another perspective for investors to monitor.

The shares of this small cap company majorly engaged in n installing, maintaining, and managing assets and technology solutions on an end-to-end outsourced basis for banks, financial institutions, organized retail and e-commerce companies, were in focus after the company started focusing on transforming its business mix 

With the market capitalization of Rs. 4,221 Crores, the shares of CMS Info Systems Ltd were trading at around Rs. 256 per share which is 43 percent discount from its 52 week high of Rs. 452 per share and is trading at a P/E of 14 whereas industry P/E stands at 19.7

Driving Scale and Margin Expansion Through an Integrated Platform Approach

As a leading business services platform in India, the organization fosters growth by consolidating its market share within its core business activities while growing its Total Addressable Market (TAM). The use of economies of scale in combination with the best talent and technology helps in reducing the cost of services.

It provides value-based solutions through strategic forward and backward integration, which enables new growth opportunities for the firm. The key to this approach is the self-sufficient business model of the platform, in which every business unit creates cash flow from operations to support growth, underpinned by good capital management practices that ensure healthy margins and cash flows. 

Operating at Scale Across a Pan-India Network

The company shows a lot of nationwide presence and scale in terms of operations through its main service platforms. This broad presence includes handling over 70,000 ATMs on a daily basis, linking up 20,000 bank branches, and serving more than 65,000 retail locations. In terms of operation, it uses a frontline work force of 27,000 people working 1,400 CITs and over 4,000 cash routing operations daily. The whole set-up handles over ₹14 lakh crore of cash per year while monitoring over 50,000 HAWKAI locations. 

Accelerating Customer Mix Diversification

The organization exhibited a strategic move in terms of changing its customer mix in FY25 and FY26, which helped them in increasing their revenue diversification in different business sectors. The largest revenue generation was from the Private Sector Bank and Retail business segments, where the percentage has gone up from 26% to 30%, while the PSU banks also had some increase, from 16% to 22%. On the other hand, the revenue share from the Managed Service Provider decreased from 34% to 28%, and the revenue share from SBI declined from 24% to 20%.

Scaling High-Margin Tech and Payments Solutions

In this regard, the firm has embarked on an overt strategy of shifting focus to technology-enabled service offerings. The proportion of Tech and Payments Solutions has risen from 7% in FY22 to 16% in FY26 and to 18% in Q1 FY27. Such consistent growth is being driven by swift expansion in HAWKAI across more than 50,000 locations and robust utilization of ALGO MVS in over 63,000 ATMs and forecasted to exceed 73,000+ by FY27. At the same time, dependence on conventional service categories has been declining in the form of a gradual decline in ATM Management Solutions from 63% in FY22 to 57% in Q1 FY27 and Retail & Currency Logistics from 30% to 25%. 

HAWKAI: Rapid Expansion as India’s Premier Vision AI Platform: 

HAWKAI has seen tremendous growth, having doubled its revenue in just two years to ~₹200 crores. Being India’s largest Vision AI platform for BFSI, CMS holds end-to-end ownership of the hardware, software, and AI models. At present, the platform is monitoring more than 50,000 sites live and has an impressive market share of more than 36% in BFSI. In addition to BFSI, HAWKAI has ventured into 15 non-BFSI verticals including quick commerce, EV infrastructure, QSR, and retail. The dual strategy makes it poised to take advantage of the huge ₹8,000 crore TAM, which includes ₹3,000 crores from BFSI and ₹5,000 crores from non-BFSI verticals. 

Long-Term Strategic Growth Path toward FY30 Aspirations: 

The corporation has an aggressive expansion path aimed at achieving services revenues of ₹3,750-3,950 crore in FY30 on the back of a 13%-14% growth rate after a 12% growth path that took the corporation’s revenues to ₹2,310 crore in FY26 (from ₹1,473 in FY22)

This vision is based on the adoption of high margin technology, where Tech & Payments is envisaged to reach 20%-22% of total services revenues, along with continued contributions from Retail and Currency Logistics (26%-28%), and ATM Management Solutions (50%-52%). 

To capture a TAM of more than ₹20,000 crore+, the company is exploiting the benefits of market consolidation and price realization through careful capital management and strategic re-investment while staying focused on ensuring margin quality and high ROCE. 

Conclusion:

Growing significance of Tech & Payments segment along with HAWKAI and ALGO MVS in CMS Info Systems is a clear indication that the firm is moving away from its ATM-based approach gradually. However, while the ATM business is still at the core of CMS, the evolving composition can help the company become a leader in technology-based services.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.