CMS Info Systems is aiming to acquire companies across its business segments, and especially those in the payments and technology segment to beef up its HawkAI machine-learning based platform, said Rajiv Kaul, CEO and Executive VC of the company. He shares business guidance for H2FY26, talks about how ATM and UPI can co-exist, and possibility of hiving off technology business into a standalone entity over a period of time. Edited excerpts:
You mentioned about new contracts from a large public sector bank and private bank in recent analyst call. What is the new order pipeline in H2?
For the order book, the numbers have not changed. Our revenue growth rate in FY21-FY25 period has been roughly around 16-17 per cent CAGR, and profit has grown 20-21 per cent in same period. From FY25 to FY30, we are taking a base growth goal of 12 per cent for revenue. This is across our three businesses including ATM, retail and consumption linked platform and third is technology and payments.
The opportunities for us look promising right now. And if we are able to execute that, which will really come from expansion through M&A. Our businesses are fairly high cash flow generative. Our return on capital expenditure (RoCE) over last four years has been averaging around 24-26 per cent post tax and if we are able to deploy it sensibly for expansion or diversification of businesses, I think we can aim to grow our topline at around 15-16 per cent over next four-five years. This can surprise some people as they feel there is limited growth opportunity in ATM business. I think cash and UPI can co-exist, there are pockets of high cash usage. Semi urban areas, for instance, have high cash usage. Urban consumption is a lot more UPI dependent today…Our ATM business line has almost doubled in last five years. There is consolidation happening in our industry, which plays to the benefit for larger players like us. With consolidation happening, either weaker players are exiting or customers are prioritising higher quality companies to get better services.
You added 5,000 new retail points in H1FY26. What is the outlook for H2?
Cash management is one segment of our business. Currency needs to move efficiently in the country. Velocity of cash is very important globally and especially in India, where working capital is always a challenge and cost of working capital is huge. If you think of a bank or a SME company, they want all forms of payments whether in cash or digital, to be in their system as soon as possible.
Think of a very low margin business in retail segment, there are X number of transaction happening via credit, debit, UPI, and then cash. Now settlement for digital transactions is instant. But for cash, the settlement is tedious. First the reconciliation process happens, then cash has to be physically checked, verified and then deposited to a bank account. Then a banker will have to reconcile the bank note in their ERP system and then close the transaction. In a low margin business, you cannot afford even 2-4 per cent mistake. So we are looking at how do we increase velocity of cash? For retailer to get access money for growth is very critical, so we try and get them back the money within 24 hours.
Further, we have built system to digitise cash for them in a better way. For instance, when our team member is at the physical store, collecting the money, we will update our system that X amount of money has been collected from Y or Z business. And that collection will be reflected in their internal systems. Then physically we make sure the data is fine, we check the amount and currency validity and we ensure that physically this money reaches the bank account of that retailer…We believe that there should be at least 5 lakh retailers using such services and today only around 1 lakh retailers maybe use it.
What is your strategy on using AI and how much of your revenue is generated from tech and payments business?
I think tech and payments business contribute roughly about 10 per cent right now, it should reach 15 per cent over next five years as other businesses are also growing at a healthy trend. Our HawkAI business is a machine learning based platform. It is a lot about predicting patterns and seeing how to prevent security incident from happening, basis certain triggers. If there are three people walking on ATM site, normally it isn’t common, if they are wearing helmet or mask, there could be something going on. If there is a lot of movement, there are sensors that detect it. We have trained our ML platform extensively over 3-4 years, and as and when any bad incident happens, you learn and work on it…We use this tool across ATMs, branches and quick commerce. This is one of the fastest SaaS business growth in India, around 30,000 sites are running HawkAI platform today. We have taken an aggressive goal that in next five years, around 80,000 sites must use this tool, the growth opportunity is immense as it is even cost efficient.
What are the inorganic growth opportunities that you see?
There will be M&A opportunities across our businesses. We already have very large market share on ATM side, so I don’t think we’re very hungry for acquisitions there necessarily. On tech and payment side, which is smaller part of business, we are growing it fast and would like to grow it even faster. Also it’s a large universe so if there are good companies we can think of partnering with or acquire, we’d love to. We are very first principles company, having grown our average revenue by 15-16 per cent CAGR and profit by 18-20 per cent since inception in 2009 till now. Banks today spend a lot of money on tech and payments services. Therefore we keep looking for niche options, let’s say B2B payments play or players making software for banks. Some fintechs post negative EBITDA, PAT. But for us, we are focused on profitable growth. Profits should be there and sustainable one. We want to build a company which will keep 20 per cent plus RoCE. I think we have good opportunities…we have done one deal this year, and given that market consolidating, we could go for a deal at a right price. If we get machine learning based platform on surveillance side, which is into some niche that we aren’t, we could consider such company. If you’re already on ATM side and help us scale faster, we will consider it, like we did with Securens. So more acquisition on HawkAI platform, it will definitely be more interest to us.
Would you consider hiving off tech business into separate entity?
Our largest revenue comes from ATM side, roughly ₹1,300 crore. That’s a good size. Tech size is only ₹250 crore, now if it gets to ₹1,000 crore, does it get to be hived off?
Firstly why do we need to hive off, one is unlocking value or the markets may not understand it in a conglomerate manner, but right now that’s not needed. Three-four years later, if our tech business revenue rises to over 500 crore, or if we get lucky and scale much faster, I think we should think about it. A Rs 1,000 crore tech company making 15-20 per cent EBITDA margin with 30 per cent RoCE, could do much better as a stand-alone platform. The main reason for hiving off is that opportunity to grow much faster is better as a stand-alone company.
Your guidance on EBITDA margin?
They have remained in range for us. It was a bit low in first half as there were investments made, cost went up, but we want to go back to FY25 level by March 2026. Our EBITDA margin is world class. Therefore I won’t want unnecessary pressure on team to keep aspiring for a very high number and sacrifice growth or market share.
