IIFL Securities gives ‘buy’ rating to CMS Info Systems, expects potential upside of 21%

Cash management to benefit from ATM rollouts, more outsourcing and market share gains

“In ATM cash management, continued ATM additions (3-4 percent per annum), rising proportion of outsourcing (current 60 percent can increase to 75-80 percent over time) and market share gains (47 percent can potentially go to 60 percent) should drive volume growth. While regulatory tailwinds will aid realisation in the next 3-4 years, CMS targets 10-15 percent cash management revenue growth even in the medium-term," the report added.

Cash management revenue should be resilient even if cash in circulation drops

According to the report, the cash management revenue of the company should be resilient even if cash in circulation drops, “Cash management revenue is linked to the number of points served and not cash in circulation (CIC). The volume of cash handled by CMS grew 16 percent YoY in FY23; even if CIC comes off, higher velocity and movement of cash from unorganised to organized channels should act as tailwinds.”

Outlook on the stock

The brokerage house has given a ‘buy’ rating on the stock with a target of Rs 419 from the current market price signifying a potential upside of 21 percent. “The stock is attractive at 14x 1YF PE considering 20 percent EPS CAGR over FY23-25ii. We maintain our 'buy' stance.”

Stock Performance

Cms Info Systems Ltd stock has given a return of 22.06 percent over the last six months. Thus, considerably outperforming the benchmark Nifty50 index which has given a return of 3.55 percent over the same period.

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