The newly listed stock CMS Info Systems has lost nearly 17 per cent in a one-month period. Shares of CMS Info Systems, which became Share Market Debut on December 31, 2021, however, is trading at 8% higher than its initial public offering (IPO) issue price 216 per.
Given CMS’s healthy earnings growth (24% CAGR in FY22-25), low leverage (debt/equity < 0.4x), long-term nature of contracts and positive cash flow over the next three years, Jefferies has decided to invest in CMS Info. Coverage is started with Buy on Shares. Rating and Target Price 300.
“Profitability could go further through route optimization and ATM-services upgrades that could offset oil price inflation. We are seeing growing profits from 34% year-on-year in FY12 and then 24% CAGR in FY2012-25. Cashflows may also improve as capex at brown label ATMs will peak in FY22,” the note said.
However, income. is most sensitive to income from ATM Trade. Therefore, the rapid digitization of retail transactions and any unfavorable changes to the terms of bank partnerships could pose major risks, as top 3 customers drive ~45% of revenue and top-5 customers drive approximately 60% of revenue, according to Jefferies. .
The combination of ATM rollout (new and replacement) and pick-up in outsourcing, expansion of the commercial cash-collection network, post-Covid normalization of business and increased compliance-services allowed the industry’s revenue-pool to grow at a 15% compound annual growth rate. can help. (Cagr) Over FY21-27, it highlighted.
Despite the market loss of cash for digital platforms like UPI, cards, online-banking etc., cash-based infra is still relevant for semi-urban and rural markets, shifting from unorganized to organized business and its competitiveness per transaction. Cost. 13-30 bps on the transaction value, may sustain its usefulness to the system,” the note added.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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