Buy CMS Info Systems; target of Rs 419: IIFL Securities

IIFL Securities report on CMS Info Systems

We recently hosted Rajiv Kaul (Exec. Vice Chairman and MD) and Pankaj Khandelwal (CFO) for investor meetings in Mumbai and the US. After having achieved 17%/20% revenue/Ebitda Cagr over FY09-23, CMS’ revenue aspiration of Rs34-38bn by FY27 entails 17% Cagr (at mid-point). The managed services (MS) business should grow faster; 40-42% target contribution to overall revenue vs. 32% in FY23. While CMS would endeavour to maintain margin, the company's primary focus would be on ensuring revenue growth amid increasing competitive intensity. It would continue to explore inorganic opportunities which offer the right capabilities and meet healthy IRR thresholds.

Outlook

The stock is attractive at ~14x 1YF PE considering 20% EPS Cagr over FY23-25ii. Maintain BUY.