In December, CMS Info Systems Limited IPO was listed. Incorporated in 2008, CMS Info Systems Limited is India's largest cash management company in terms of the number of ATM points and retail pick-up points as of March 31, 2021.
The company is engaged in installing, maintaining, and managing assets and technology solutions on an end-to-end outsourced basis for banks, financial institutions, organized retail as well as e-commerce companies in India.
In the first place, CMS integrated business platform is supported by customized technology and process controls.
In addition CMS enables it to offer its customers a wide range of tailored cash management and managed services solution.
The Company caters to a broad set of outsourcing requirements for banks, financial institutions, organized retail as well as e-commerce companies in India.
firstly, the demand for cash and cash related services in India has increased, banks and other participants in India are increasingly outsourcing their ATM operations and management.
Secondly, As of August 31, 2021, it has a network of 3,965 cash vans , 238 branches , offices to cover all of India's states , union territories and covering 97.04% of India’s 742 districts, 14,949, or 77.46%, Indian postal codes.
At last the revenue of the cash management market in India grew from approximately ₹10.0 billion in the Fiscal Year 2010 to approximately ₹27.7 billion in the Fiscal Year 2021, a CAGR of 10.88%
Despite consistent growth in revenues, we saw a decline in FY21 which can be attributed to COVID-19. According to the company, the revenue in FY20 was Rs. 1388.29 Crores and fell to Rs 1321.92 crore in FY21.
However, the company has improved its net profit from Rs. 134.7 crore in FY 20 to Rs. 168.52 crore in FY 2021. Also the company has stable financial performance and increasing margins.
In the first place, the risk of market volatility needs to be considered right now on the back of rising cases from the omicron variant.
As the government focuses on digital payments, a further decrease in the use and availability of cash can have an adverse effect on business activities.
The IPO is priced at a PE of 19x to its FY21 EPS of Rs 11.09 and a P/BV of 3.24x on the NAV of Rs 66.52, which is in line with its listed peers. Thus we assign an "Avoid" rating to the IPO.
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