If you have withdrawn cash recently from an ATM, then chances are, you have used the services of CMS Info Systems. The company is India’s largest cash management company in terms of the number of ATMs and retail pick-up points. It provides a range of services to financial institutions, organised retail and e-commerce companies. From cash pick up and delivery to feeding it into ATMs - the company caters to a broad set of outsourcing solutions. And now, CMS Info Systems is all set to launch its IPO.
Offer details
- Start date: 21 December 2021
- End date: 23 December 2021
- Price band: ₹205-₹216
- Minimum investment: ₹14,904
- IPO size: ₹1,100 crore
Timeline
- Allotment: 28 December 2021
- Refund: 29 December 2021
- Credit of equity shares: 30 December 2021
- Listing: 31 December 2021
All about the IPO
Founded in 2008, CMS Info Systems has an interesting history. In 2015, Hong Kong-based Baring Private Equity acquired CMS Info Systems by buying out stakes from Blackstone, the then owners CMS and the management team. This reportedly turned out to be US-based Blackstone then-highest return on an investment since opening its India office in 2005.
Rajiv Kaul, who was a part of the management, decided to reinvest his money into the business and stay on. Since then, under Kaul’s leadership, the company has continued to scale new heights. CMS Info Systems has 3,911 cash vans and its network covers 96% of India’s districts. In FY21, the total value of currency passing through all its ATMs and retail cash management businesses amounted to a staggering ₹9.1 lakh crore.
The company categorizes its business into three segments - cash management services (69% of the revenue), managed services (28% of the revenue) and others (3% of the revenue).
Financials
Revenue: 8%; Net Profit: 32% (FY19-21 CAGR)
Strengths
- Has a market share of nearly 25% based on total number of ATMs in India
- Caters to leading banks such as Axis Bank, HDFC Bank and ICICI Bank
- Is virtually a debt-free company with strong operating cash flows
Risks
- Rapid adoption of digital payments could reduce the need for ATMs or bank branches, especially in urban areas
- The government’s push to make India into a cashless economy
- High client concentration. Top three customers accounted for more than 40% of the total revenue over the last two financial years
- Operates in highly regulated cash management industry
Good to know
Despite the spurt in digital transactions in India post demonetisation, around 90% of the payments are still made in cash. Also, the number of ATMs in India are expected to grow at a CAGR of 6.2% to 3.6 lakh by FY27. Being one of the leading cash management companies in India, CMS Info Systems is well-positioned to benefit from the growth in the coming years.