IIFL Securities report on CMS Info Systems
While CMS’ 13% YoY revenue growth was below estimates due to transient factors, PAT grew by a healthy 22% on better mix. On the earnings call, management stated that cash usage growth has been healthy including in metros despite the proliferation of UPI. Higher outsourcing by banks, improved progress on cassette swap implementation and rising penetration of organised retail are positives for the cash management business. The company expects remote monitoring and software business to account for 8-10% of overall revenue by FY27. Despite the 1Q revenue blip, we maintain estimates and expect CMS to achieve its Rs25-27bn revenue guidance for FY25.
Outlook
The stock trades at an attractive 15x 1YF PE, considering 20% EPS Cagr over FY23-25ii, debt-free balance sheet and healthy return ratios. We raise our DCF-based TP from Rs 419 to Rs 449 due to lower WACC and rolling forward to Sep-24. Maintain BUY.
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