According to reports from Live Mint, Parag Parikh Flexi Cap Fund acquired a 3.65% stake in CMS Info Systems during the December quarter. The investment aligns with Parag Parikh's typical approach, targeting businesses with strong fundamentals including a business moat, robust cash flows, zero debt, high return ratios, and deep client integration. This strategic positioning suggests confidence in CMS's market position despite current margin pressures.
As reported by Live Mint, CMS operates in a sector undergoing significant consolidation where weaker players are exiting due to credit and liquidity challenges. The company has successfully gained a 2% market share in the now largely duopolistic cash logistics market, competing alongside SIS-Prosegur. CMS has strategically positioned itself as a mission-critical partner through integrated contracts spanning ATM replenishment, software, and remote monitoring, with clients including private banks, D2C customers, and PSU banks.
According to the report, CMS has successfully pivoted from pure cash logistics to an integrated services platform. The cash logistics segment accounts for 61% of FY25 revenue, while managed services and technology generate 37%. The company has improved its competitive standing in managed services, rising to third position from fifth, with plans to reach ₹2,900 crore revenue in FY27. CMS currently serves 13 customers contributing over ₹50 crore each in annual revenue, up from eight such customers in FY22.
As reported by Live Mint, consolidated revenue grew 7% year-on-year to ₹2,425 crore in FY25, supported by higher cash volumes and network expansion. However, EBITDA margins contracted slightly by 56 basis points to 26.1%, with net profit growing 7% to ₹372 crore. In 9MFY26, revenue grew 3% to ₹1,854 crore but net profit declined 18% to ₹224 crore, driven by wage inflation and investments for new contracts. The company maintains strong fundamentals with ROCE at 25.2% and converts over 70% of operating cash flow into EBITDA.
According to the report, CMS has outlined ambitious targets including reaching ₹2,900 crore revenue in FY27 with technology & payment solutions projected to grow 20% and reach ₹400 crore by FY27. The company plans to acquire an ATM management business for ₹100-125 crore to expand its service revenue to ₹4,500-4,750 crore by FY30. At the current price of ₹289 per share, CMS trades at a price-to-earnings multiple of 14, below its three-year median of 19, suggesting the market is discounting current pressures while not fully pricing in recovery potential.
