Ladies and gentlemen, good day and welcome to the CMS Info Systems Limited Q1 FY 2026 earnings conference call hosted by Emkay Global Financial Services Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on their touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Avinash Singh from Emkay Global Financial Services Limited. Thank you and over to you, sir.
Thank you, Sothi. Good evening, everyone. On behalf of Emkay Global, I welcome the management and thank them for this opportunity. We have with us today Rajiv Kaul, Executive Vice Chairman, CEO, and Full-Time Director, Pankaj Khandelwal, President and Chief Financial Officer, Anush Raghavan, President and Chief Business Officer, and Puneet Bhirani, President of Operations. I shall now hand over the call to the management for their opening remarks. Over to you.
Good afternoon, everyone. Thank you for joining our Q1 FY 2026 analyst call. In a seasonally weak quarter marked by geopolitical issues and muted consumption, we delivered a consolidated revenue of INR 620 crore, up 5% year-on-year, and a PAT of INR 93.6 crore, which is a 3% growth. The above-mentioned issues resulted in a 10% dip in India ATM transactions at an aggregate level and also impacted the variable billing in our retail cash management business. Our best estimate is that the revenue and EBITDA impact of these would have been to the tune of INR 8 crore-INR 10 crore in Q1. Additionally, wage increases and long-term union agreements increased our Q1 costs, and as you can see from earlier year trends, this gets evened out over the year through productivity gains and through pricing.
In the last five months, our field operating teams have worked exceptionally hard to help large banks with handling their ATM channel availability issues at an industry level, which we mentioned too in the last call. While we have seen some other services firms delay their wage hikes, we haven't done so. To be fair to our team members for their effort and hard work, keeping our teams motivated and engaged in a business which relies on trust each day is very important. On a positive note, we expanded our cash logistics footprint to 153,000 business test points, which is a 9% year-on-year increase. We also secured new order wins worth INR 500 crore in the quarter, which also includes a landmark multi-year multi-vendor software contract with a leading bank.
We are pleased to announce the binding agreements to acquire Securens Systems Private Limited, a pioneer in the AIoT remote monitoring space with a strong reputation built over years of investment in tech capabilities. We have known the company for several years and have high regard for what the team has built. We won this deal against other strategics at an enterprise value of approximately INR 80 crore, and this type of deal is a win-win and aligns perfectly with our M&A philosophy. Valued at approximately 10x FY 2025 adjusted EBITDA and estimated 4x on a post-synergy basis, this will help us scale our vision AI business, expand our client base, and enhance our tech stack for intelligence, surveillance, and predictive analytics across BFSI and retail. I hope some of you have had the chance to look at our revamped brand positioning launched earlier this week.
Based on extensive research, we decided to retain the CMS name but change our brand positioning from connecting commerce to a brand promise of unified platform, limitless possibilities. We feel this is bold, forward-looking, and reinforces our platform approach to building a unified business. This shift also underscores the vital role we play for our customers today, as well as the significant platform potential of our platform going forward, examples of which are enumerated very well on our new website, www.cms.com. I really urge you to go and have a look at our new website. Before I hand over to Pankaj for the financial details, while our metrics may not reflect all the underlying efforts going into running and strengthening our robust platform, I'm very proud of the incredible hard work which our teams are bringing to bear to work every day. Pankaj.
Thank you, Rajiv. Let me walk you through the financial details for Q1. Our consolidated revenue grew to INR 627 crore, a 5% increase year-on-year, while our PAT grew to INR 93.6 crore, up 3% on a year-on-year basis. In addition to wage hikes, which typically result in a softer Q1, this quarter was further impacted by specific factors which Rajiv talked about earlier. Both cash logistics and managed services reported 88% year-on-year growth, scaling to INR 417 crore and INR 258 crore, respectively. Our total EBITDA grew by 3% year-on-year to INR 159 crore, while EBITDA remained flat at INR 113 crore. Because of the timing difference between the investment and corresponding revenue accruals, our balance sheet remains robust, and we will continue to discipline the approach of capital allocation to support both our organic growth and strategic acquisitions like Securens.
Our current CapEx guidance for the year stands at INR 250 crore-INR 300 crore versus the initial guidance of INR 300 crore-INR 325 crore. Let me now hand over to Anush to share key business highlights.
Thanks, Pankaj. Good afternoon, everyone. Let me share with you a more detailed view of your underlying market trends to the best of our knowledge. As expected, the ATM install base has been quite impacted due to agency-related ATM shutdowns across banks. We did mention this to you last quarter that it would take a while for the dust to settle, and the situation right now still remains quite fluid. These contracts are complex, with multiple asset ownership issues, unpaid vendor dues, which are all unresolved. Most of the banks are taking time to clean up this old legacy network, preferring to shut down the ATMs and later roll out new RSP for replacement or expansion. Out of the almost 20,000 ground-level ATMs of AGS, almost 50% of them have been shut down as we speak. The AGS issue has affected liquidity and credit availability in the sector.
This has caused an adverse impact on certain small and mid-sized MSPs who are taking time to raise capital for fresh ATM deployments, even for those orders that they had run last year. Further, the slowdown in consumption is weighing on ATM transactions. BNE deployers are preparing to wait for economic growth to pick up. Case in point, across key public sector banks, out of 24,000 ATMs awarded over the last year, only 6,000 have been deployed so far. This causes a downstream and consequential delay and impact on our ATM cash revenues. The Chairman and Managing Director of SBI has been quoted in the media recently, affirming that the dip in the SBI ATM base is transitory in nature and expected to recover by Q2.
In a large public sector bank's cash outsourcing RSP for 10,000 ATMs in March, CMS ended up being the only qualified bidder, and we were hopeful for this to go live in Q1 itself. The bank has unfortunately decided, however, to cancel the RSP, refloat it to get more bidders. We hope for this to close in Q2 and go live in H2. While these industry trends are challenging in the immediate term, we do believe that it will lead to an accelerating consolidation in the MSP segment, which over the medium term should prove positive for rising and fixed-price BNE opportunities. Our ATM cash market share has increased to 58%- 50%, reflecting our stability amidst the volatility and churn that we witness. As you're aware, our approach changed last year itself in pivoting away from transaction-priced BNE contracts, and since then, our focus is on mostly fixed-price contracts.
In good news, our INR 500 crore of order win spans fixed-price BLAs, Algo Software, and card payments, and has no transaction-linked BLA revenues. We have significantly scaled up our relationship with RBL Bank over the last 12 months, and they are now our second largest customer. In Algo MBS Software, we have secured a landmark deal, meaning that now two of the top four Indian banks will be using our software across 85,000 plus ATMs. This is a strong endorsement of our platform capabilities. With that, let me now hand over to Rajiv for the closing remarks. To summarize Anush's commentary, I think I want to reiterate that we will focus as a team on doing the right things from a long-term perspective. We aren't chasing growth at any cost. We are very careful, and we are walking away from low-margin RSPs.
We retain our pricing discipline, and we prioritize contracts which will give us predictability and scale. At the same time, we continue to compete vigorously against lower-margin players to gain market share across most of our businesses. This quarter itself was about disciplined execution amidst our corporate environment. We delivered stable financials, signed a strategic acquisition, and continue to make the long-term investments in our brand, people, and automation. In our last call, we had highlighted our strong FCF and our balance sheet strength of INR 4,000 crore. This is a phenomenal strength. Over the past few years, many of you have regularly asked about our M&A plans and have been patiently waiting to hear more on this plan. Our growth and M&A strategy has been consistently focused around building and scaling cash-flow-generative businesses.
We have a culture of investing in technology to drive operating leverage at a higher scale and thereby creating a virtual flywheel. Over the last decade, for those of you who are new to CMS, I want to remind you that CMS has a track record of having done eight programmatic M&A deals at all types of sizes, and all of them successful. The last acquisition we did was in 2021 before our IPO. In the last couple of years, it has been challenging to transact, given a fairly scrappy IPO market. In the last year itself, we have come close to signing some mid-price deals but had to walk away, either due to cultural misalignment or to deal valuation issues.
A case in point, we almost entered the bullion logistics sector through an M&A opportunity but chose to walk away as the promoters wanted a JV for perpetuity while we would be running the business. This did not make sense for us. There are other companies we are looking at closely, and we will update you as and when there is anything to report. The sectors of interest are mentioned in our investor deck. I do want to reiterate that a tough macro presents a very good opportunity for deal-making, and while we have been patiently waiting for these times, even though IPO markets can continue to surprise us. In closing, we are making solid all-round progress in executing what we can control, gaining market share, driving alignment and accountability across our various operating teams. We have done an extensive reorg, which we mentioned last time.
Our leadership team is fairly simplified. We have Anush Raghavan, who has helped build our cash logistics business to its market share dominant position today, who's now the Chief Business Officer for the entire business across all our businesses. Puneet Bhirani, who joined CMS Info Systems 16 months ago from Byju's, Ola, and earlier Encompass, has taken on the entire operational gamut of responsibilities as Chief Operations Officer. This will help us phenomenally in customer centricity, alignment, and accountability, along with agility to compete in a fairly aggressive marketplace. With that, I'd like to end our commentary and move forward to Q&A. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Hitesh Arora from Abakkus Asset Manager. Please go ahead.
Hi, Rajiv. I was just requesting the query on the margins for both the businesses, the cash and the managed services businesses, the EBITDA margins. The margins have fallen quite sharply from just reading the numbers for the cash business from 35.5%- 33.9%. That's roughly 150 basis points down, and even on the managed services, it's down from 17% last quarter to 14.1%. It's almost 290 basis points down. It's a significant reduction. Despite that, the share of the trading revenue actually would have fallen over the last one year. Is this a big surprise that this huge reduction in the margins? Could you kindly comment?
Hitesh, I'll have Pankaj give you a little more detail, but I think the last call said we would like you to start thinking about the company on an overall composite level because the CMS managed services business has become now the second largest customer for CMS ATM cash management. A lot of the revenue and costs aggregating it clearly, as in, you know, to each business unit is very difficult. We continue to report the numbers, but I think look at it overall. Q1 has been softer in the cash business specifically, so think of the wage hike impact in Q1 will have a dip in margins. We also continue even today to support a large public sector bank in delivering ATM cash services at a marginal cost because they needed help in transition from our earlier banker.
While they will decide on an RFP and, you know, who will win this contract later. In terms of the managed services business at a high level, there is straight away an operating margin impact from the different transactions. I think at an aggregate level in India, the ATM transactions for ATM in this Q1 have dipped from 12 to 14 transactions. That goes straight, unfortunately, not all the revenue goes straight away from the bottom line. I think your question is all fair and valid. I think we'll have to wait for the year to progress to start seeing changes and improvements in the margin profiles as contracts will move up. In fact, in M&A, from my memory, we also had a last contract where the investments have gone up, right, Sunday? The revenue accrual will start in the later part.
The CapEx investments have been made for that impact a bit, but the revenue accrual will start later in the year as the project gets live for billing.
If you see that the EBITDA for M&A was INR 60 crore, which has gone to INR 64 crore in this quarter, whereas the EBITDA has dipped from INR 36 crore- INR 33 crore. There is a delta of around 17%, and that is largely because of the project aggregation. The ramp-up will take time. However, the deficits and other costs have already hit us.
Okay, thanks. Thank you, Anush. We'll come back to this next time.
Thank you. The next question is from the line of Balaji Subramanian from IIFL. A reminder to all participants, anyone who wishes to ask a question may press star and one on their touch-tone telephone. Please go ahead, sir.
Thanks for taking my question. My first question is on the status of the 70,000 ATMs owned by banks for which AGS was doing pure managed services. Have the banks actually bid those out? If so, have you seen any wins from that portion of the price? That is my first question. The second question is on this acquisition that you have done of Securens. In your opening remarks, you did mention that this deal happened at 10 times EBITDA FY 2025, and on a post-synergy basis, it will be about 4x . Can you just elaborate a bit on the synergies, from where the synergies will come, and a bit more color on how you come to these numbers? Thank you.
Balaji, hi, Anush. I'll just take the first part of the question. As far as the non-BNE ATMs are concerned, as we've updated in our earlier calls as well, we've been extending help along with the private industry in helping banks with the transition. We've been able to get our market share, if not slightly more than that, in terms of success in some of these contracts. In fact, when we speak about ICICI Bank and a few other private sector banks where we were not present, this has allowed us an opportunity and entry strategy into growth, balancing against what was earlier a slightly more PSU bank-based portfolio. Balaji, I think while I want I'll give you a high-level answer at this stage, I think it will not be right for me to share intricate details of how the synergy will come out.
At a high level, the productivity and scale, right, when you take the two entities together, we will have a business operating at roughly about 45,000 sites live whenever the transaction concludes. At that productivity will change and improve. We will save significantly on any common overheads, infrastructure costs, and even in terms of just time management, IT infrastructure, there are many costs which we can. Do you have a standalone company running a roughly INR 80 crore business which will merge into a INR 2,500 crore company running a larger business overall? I think there are lots of costs which are not essential when we move forward. I think that's the high level when we think about it. Also what I wanted to mention is this was a fairly competitive bid process for us.
It was about creating a deal which sort of respects the brand, helps the team move forward, and creates a win-win for customers also. Importantly, I think from a book value perspective, I think this would be a transaction which would be close to book value.
Got it. Thanks a lot on all of this.
Thank you, sir. The next question is from the line of Krushi Parekh from BugleRock PMS. Please go ahead.
Yeah. The first question is on the margins trend. To understand that challenge is something that we have jacked up now. Moving forward, over a period of time, what are the levers that you have to ensure that the margins start regaining what it was?
Hi, Anush. I think if you look at our historical performance over the year, you will notice that there is a certain cyclicality to our quarterly earnings. There is always Q1 is almost a little bit of a set scheme on account of, you know, creating provisions and also paying out. One of the fairly large gates of people whom we work with, some of them unionized, many of them lost. Those agreements are done through the year, but the provisions get created at the beginning of the year. We have the rest of the year to, you know, as growth comes in, which helps drive operating leverage and productivity. It also sort of, you know, creating these provisions at the beginning of the year also gives us a healthy way of trying to figure out what are the right ways to approach pricing with our customers.
Generally, we tend to see that Q1 starts off little weak, and through the year, we sort of normalize those overall margins ahead.
Okay. My second question is, we are witnessing this dip in the ATM transactions. In your view and how you read the industry, is it purely because of slowdown in the overall consumption and the economy, or are there some other factors also?
I think the way we see it, and reading some of these macro for a long time publishing reports about it, this is, again, a little bit transition in nature. Generally, what we are seeing right now is not unusual in the context of longer-term annual success. For various reasons, Q4 is usually a period of high spends in the economy, followed by Q1, which is usually a dip. As for certain economics we've spoken to offline in the past, many of them allude this to also semi-urban rural India going through its own particular agony season of harvest and everything. I think right now, I would just allude this to a combination of two things, which is the cyclical nature of the Indian economy, a little bit more so now, especially with broader consumption being more muted and tepid.
Okay, thank you. I'll join that and the team.
Thank you. The next question is from the line of Satish Uppal from Ellada Capital. Please go ahead.
Thanks for taking that question. I'm sorry if I'm initially repetitive, and you may have covered in your opening remarks. I just wanted to understand the order lifecycle. Right from when you win the order to when that flows through to the revenue, if you could just possibly help us understand the timeline for that, and you know how much is the execution ramp-up that has happened here. My second question is that you highlighted that Q1 is usually a seasonally weak quarter. If I look back last couple of years, at least the revenue growth has been about 12%, 13%+ . How do we read that in context to the Q1 of this year? Just lastly, on the acquisition, what is the strategy going forward in terms of how we plan to work over here?
Is it more from a client diversification perspective or just to understand the rationale behind why you went with these companies in particular? Thanks.
Let me take the first two questions, Prakash. I think as far as the order book and its calculation revenue is concerned, we've spoken about this in the past as well. Just to rephrase it to anybody who's new to us and on this call today, our order book, by definition, we only limit it to the non-cash business portions of the revenue, simply because these are contracts which are either multi-year recurring or annuity in nature. This could be ground-level ATM contracts, remote monitoring, for instance, or fixed-price BNE as well. Generally, when it comes to executing a BNE-sized contract, the timeline could be anywhere from six to 10 months. One of the key dependencies is really being able to get the hardware and the overall solution tested and approved by various agencies. These could be NPCI, Visa, Mastercard, mostly from a payment systems angle.
Subsequently, there is a whole aspect of getting the site readiness and rollout happening. Roughly about 6 to 12 months on ground-level ATMs. Remote monitoring is extremely dependent on the nature of the solution and the scale of the implementation. Last year, we won this, you know, what we told you, a very complex deal where it's a large public sector bank to set up an on-prem command center and roll out branch monitoring for thousands of their transfers. Things like that end up having a much longer gestation period simply because developing the use case of these AI models and getting those approved to a certain satisfaction level of the customer has a certain, you know, just incubation time. Broadly, I think for the purpose of averaging it out, I think 6 to 12 months is what we would think of internally.
I mean, I think of the, you know, the software contract we have with ICICI, this could take six to 12 months. Some of these are not under control because when you're building a corporate solution, integration with bank systems, approval process could have sometimes delays, which are very difficult to fathom when you start the project. You're therefore forecasting the accuracy is not very easy. Given the nature of a contract, it becomes far more complex and integrating multiple things with the contract and not just one piece. That is the first one. The second one, I think with respect to your question on the first quarter, looking at the previous and I think look at, you've got to look at it both YoY as well as sequential. From a sequential perspective, when I look at FY 2024, 2025, and 2026, they're all sort of staying in a narrow range.
FY 2024 was 2%, FY 2025 was in fact a slight decline of 4%, and 2026 was 1%. What you're alluding to as a YoY metric for last year, I think would have been more because FY 2025 would have had a larger product component share. I think this gives you a broader sense of how to think of it from a service review perspective. I think the last question was on security. Sure. For any acquisition, you are trying to do this on a few things. From our angle, and maybe you are newer to our calls, I think our approach is always to think about looking at majority control or full control of the company in a sector which we already understand very well. Securens particularly was relevant to us simply because it's one of the key players. It's amongst the top five players in the space.
It's one of the first ones to have set up operations. They've built very good technical capabilities. While we have our own, it sort of helps having a client entry. It also is, bluntly, from a block and tackle perspective, a sector which we want to dominate as we go forward, right? We were roughly at 25,000- 30,000 sites. We have a midterm goal to 100,000 sites. We don't want a good quality player to be bought by somebody else who starts competing with you and destroys the market and whatnot. As and when you get an opportunity to consolidate at a value which makes sense and the payback period is in our norms, the ROC on the deal makes sense, we will go ahead and execute.
Okay, thanks. I think this is very useful. I'll join that in the queue, and all the best.
Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and one on their touch-tone telephone. The next question is from the line of Divyansh Gupta from Latent PMS. Please go ahead.
Hey, Rajiv and team. First question was on the camera in the last quarter or sometimes that whole Chinese camera not being allowed or government expressing concern. Does it affect us any which way, us plus Securens?
I'll let Puneet, who runs our entire operation, handle that.
Hi, Divyansh. This change has caused some stress in the system, but all of us are working with our customers. There are certain cameras that have been STQC approved. We are working with all the customers to either get the realignment done and continue the deployment or get some interim release to manage the situation and then change the cameras as the STQC approval comes.
Does it also affect any fresh new orders which might get delayed because of all of this? How should we read going forward?
The industry understands this. Customers are aware of the challenge. More and more cameras are getting certified. It's a transitory phase. This should get over very soon.
Got it. Understood. The second question is a two-part question on the Securens transaction. First, from a customer sector perspective, right? My understanding is our Hawkeye was mostly BFSI, with, let's say, that QCOM on that E1 with some other segments. Is there a sectoral overlap with Securens, or is it a very complementary sector to us? The second part of the question is, is there any reason why they were selling at book value, or, let's say, what was their incentive to exit from the business?
I think we should maybe ignore my comments on book value for right now and just look at the logic of CMS. If you're a CMS investor, we should focus on CMS and not Securens so much. I think there is an overlap, of course, on BFSI. The BFSI is a large space where there are four to five players competing fairly aggressively and working there. They also, given their history in the industry and a long track record, have been able to penetrate broader sets of clients, including retail, which are of interest to us. They have solution sets, they have teams, and we're hoping with the CMS wherewithal, we should be able to invest and grow that faster.
On the CMS side, we already did mention to you or other investors in the last call that we were able to expand with our capabilities into newer sectors that include quick commerce and EV infrastructure charging sectors. I think overall, we are looking at there is a reasonable amount of complementarity. Yes, there is also some overlap. That's where some of the synergies come in. Each client deal is very specific, right? Each client is looking for always, whenever there is software, there is always a little bit more tailoring and tailored solution to a particular client. Doing pilots, proof of concepts, and winning clients, and replacing earlier install base of a competitor can be quite an onerous task over time.
In terms of a deal indeed, I just think that overall, one has to take a call on what's the best way for a company to continue growing and competing. I think for some of the medium-sized players, we think they will over time have to merge or sell into some of the larger ones. Our job is to make sure that we can keep going much faster than the rest of them.
Got it. I have a couple of more questions. Should I continue or join back with you?
You might as well finish it now.
Sure. For the SBI tender, while it's been upgraded, to know that we were the only guys which were qualified, and for maybe public sector reasons, they rejected and they are redoing the process. The question that is there is that, AGS went away, but there are other players, other bigger players that are also there, right? How will the process now work? I'm assuming they will relax some conditions, more qualification comes in. Is that how we should think, and therefore, commercials might also get affected because they already received the specification?
I don't think we or people can comment on a process run by a large bank in the country. I think we'll wait for the process to pan out and see how it goes.
Got it. Got it. The last question is that in a previous call, we always said that our priority is growth, margins come second. At least in the last year, we have been struggling because of things which might be under our control or might not be under our control. Are there any green shoots that you are seeing that give you confidence that, let's say, a quarter or two down the line, things should happen? Is there anything that you can share from your closer view on the business?
The comments I remember which I have made historically, and I hope that's what you've heard, are that between growth, margin profile, and market share, we would, as a management team, love to get two out of three right every quarter. We would prioritize, if there is growth, we would focus first on growth while we maintain market share. Then margins, we don't mind if they go up or down a little bit. I think the last quarter, we did a very good job on both market share and margin profile. I would say this quarter, only market share is where we would take the buck and not on growth or margin profile. I know we are all in the QSQT zone and life, but from an annual year perspective, we hope to be able to bridge and balance this out by the end of the year.
Green shoes, I have now just become very wary of thinking hopefully about green shoes. Last year, we thought about a festive season. What is in our control is the order wins and trying to execute them sooner and as soon as we can. That's what we are just focusing on. The rest, of course, we'll compete. We'll be block and tackle opportunities. We'll look at M&A. We have a fairly significant order book. If you ask us, are we feeling positive and optimistic? Yes, in the next couple of quarters, yes, we are, simply because we have the orders. We just have to get them up and running. While there'll be new orders or new bids that come up for winning or losing, whatever, we'll see.
I think we have a healthy pipeline to go focus on executing to regenerate the growth aspiration, which we have said in our services business of 30%- 40% for the next couple of years. That's what we are focusing on targeting right now.
Got it. I'll join back with you now. Thank you.
Thank you. The next question is from the line of Praveen Kumar from Equitas Capital Advisors. Please go ahead.
Hi. Thank you for the opportunity. I had a couple of questions. The first one was on the transformation slowdown, which has been happening for quite a few quarters now. I just wanted to understand, in terms of your medium-term growth targets, I think it's 14% or thereabouts, that you want to grow it. At what point do you think this slowdown, consistently, starts affecting your aim to grow in the growth? What kind of tactical strategy do you see yourself taking to overcome that? That's the first question. The second question was on the card services, which is part of the business, which is a smaller part. I noticed that Q1, on a YoY basis, it declined by 23% of the top line. I just wanted to understand any specific reasons for that.
Yeah. I mean, great questions. Let me take the first one. I will refer to, again, businesses we talked about that as a company, our future and growth is linked to three broader trends in India: our consumption growth, formalization for GST and whatnot, especially in the retail sector, and outsourcing trends in banks. I think we've had a macro situation in FY 2022, 2023, 2024 where almost all three played out very well, maybe the post-COVID, post-whatever, but played out very well, including a positive regulatory environment, which I think helped us drive very solid growth of almost 20% revenue each year and 30% PAT each year. The slowdown impact also linked to some outsourcing changes in the last year, I think, has clearly affected our growth in FY 2025 itself and right now in FY 2026 Q1, as you see.
I think we are right now at the receiving end of these factors not playing out. In fact, even in formalization, now this is maybe too early, but when we look at our retail sector, we have gained good share. We are a market leader there. We continue to gain a lot of new stores for our retail cash business. We are at the same time seeing a massive churn and store shutdowns. I suspect, and I'm not a retail sector expert, I suspect this could be that post-COVID, there was a lot of growth amongst organized retail and physical store locations across, you know, organized retail and GSTs and whatnot. There is churn. When there is some slowdown, people start churning the bottom, you know, the bottom 5%, bottom 10% of stores.
While we continue to have new store additions, we also continue to see a fairly aggressive churn in the number of stores which are maybe, you know, sort of shutting down. Each time this happens, there is a ramp-up, ramp-down cost, right? When you have to change your routes, you have to involve new routes, you have to move resources. I think we are, I would say in the last five quarters, there have been maybe three, four months where we've seen a positive macro environment, maybe around festive season, a little bit in February and March. April, May, June has been quite tepid. I would point you to our India consumption report, which we print annually. I think the last one was done in May. It'll give you some sectoral trends.
I don't want to take three months and be able to tell you, I can't tell you what the next three months will be like and when this will pick up. We hear, like you would, on different commentaries that rural is starting to pick up and urban is about to pick up. We'll keep our fingers crossed and wait for it. I'm sorry, on your second question, I missed that question, but if somebody else heard my team, they will answer.
For the card business, there is a slight dip in this quarter. There were the two banks who delayed the recarding by one quarter, and that resulted in a slight dip in the revenue. This is a delay, not a loss of.
No, no, no. There's no loss of contract. The contract remains the same. There is a deferment by the two banks for the recarding. I think the deposits have got postponed or whatever, but I think in the final quarter of order wins, we've got a good card order win as part of that as well.
Understood. I think just to follow up on your response in the earlier question, from an outside perspective, as an investor, how should we look at, I mean, how should we correlate consumption growth as we buy, let's say, results of other consumer-focusing companies, etc.? How should we index that to the growth rate you can grow it? Can you give us some color on that?
I'm unfortunately not a public market investor, so I don't know how others are doing. What I would say is, let's drill down, right? Let's take our retail sector. Our retail sector is sort of a misnomer. It doesn't only do retail. It does organized retail, e-commerce, NBFC, hospitals, and schools. I think some of those are, it also is a public sector, right? It could do railways, cash pickup, and whatnot, and processing. Some of it is steady, but some of it is variable, right? Especially the free-flowing income or the free-flowing spend is variable. I think we have seen an impact there because 80%- 85% of the revenue is on a fixed basis. Like we need to turn up, and whether we collect INR 50,000 or INR 500,000, we should get paid an X amount.
There is an amount linked to variable, sorry, there's a lot of variable linked to the amount of currency being picked up and processed. That does get affected and therefore has both an operating leverage or a deleverage in moments when there is variability. I think we've seen very steady businesses, and we've seen market share growth. I feel that on market share and comparability, we are at the forefront. We would think that with formalization and GDP growth, we would like to target growing at double digits in these businesses. I think we've alluded to 10%- 12%. Whether some time you get markets again or you get operating leverage leading to an EPS growth, which is better, that's where we come up to trying to go in the 12%- 14% or 13% range. That's only retail. I think that's one example.
If you take RMS, that's growing obviously faster. It's a smaller business. We are having good traction in the last two, three years with our capabilities and our scale and also our competitive positioning out there. We aim to grow that business at a much larger pace. In dependent forms, outsourcing again, right? If there are 100,000 ATMs and, let's say, branches which are not yet outsourced for AI-based services, we are dependent on the bank coming up with the tender, then bidding and winning and executing those. Meanwhile, we try to push the growth by looking at other sectors. Hypothetically, we could also look at growth outside the country, but I just think that would be too much of a distraction for us, and we currently focus only on India.
The largest business, which is ATM Cash, I think Anush has alluded to fairly in detail about some of the impact. I know a lot of people, in last call itself and post-last call, felt that given one industry player going out of action, it should automatically result in a big bump up. We have always said this will take time to play out. We have never seen this situation at that scale before. We've seen smaller players grow up, and we said we will be careful and waiting to see how this pans out. Having said that, a couple of large banks have, one large bank has already moved a locked truck barrel. They're intending to move to CMS. One mid-sized public sector bank has already done the same. Another public sector has floated an ROC, which we have won.
A large PSU Bank contract we already talked to you about has gone in for a refresh or a rebid or whatever it is. These things will take some time to pan out. We can only share with you as the situation gets more clearer. I just think that if you look at the ATM Cash business, our market share, which would be 50% historically, moved to 53, 54. Currently, I'm scared to even admit the number, but temporarily it looks to be in the 58 to 60% number. Now, will that be 58 or will it become 55? I don't know. It just tells you about the strength of the platform in the current market situation.
Understood. Thank you for the very details.
Thank you. The next question is from the line of, the next follow-up question is from the line of Krushi Parekh from BugleRock PMS. Please go ahead.
Yeah. Hi. It currently appears that at least on the BFSI side, we may have some kind of a slowdown, at least for the next six to nine months or maybe even a year. How is the traction for us on the retail side that we have settled in now? We can overcome it, and we've had an independent sales team as well to tap into this market.
Hi, Anush. Yeah. No, just on the first part of what you mentioned, I don't think I would take the interpretation as a six to nine months. I think we're seeing this. Having said that, as Rajiv said, consumption is one part of it, but more importantly, so is the bank outsourcing and the order book execution. I think what we see in terms of the pipeline and our ability to grow in terms of what the pipelines are upcoming, plus what we already won, which needs to be executed, I think we see that we don't think it should be as long drawn out as that. On the retail side, I know we didn't cover it in as much detail this time as we do. Maybe we'll take the H1 to give you a lot more color. We continue to keep expanding on new customer wins and brands.
Currently, we have more than 100 brands with whom we are working directly. I think it's a very solid value proposition and platform that we have going. When we today actually look at a lot of opportunities from the inorganic space on the payment side, it's very heartening to me, at least to see what we've done as a direct-to-retail operator. Actually, very closely balanced what that set of business looks like. You work directly with brands. You help them in creating an integrated tech-based approach. You create a lot of automation to help resolve issues around treasury reconciliation. The kind of stickiness and the kind of long-term contracts and revenue to get there are phenomenal.
I think our ability to, what we've been doing in terms of widening the set of customers that we work with, which used to be just organized retail earlier, today we work with schools, broader educational institutions, large hospital chains, a lot of LIVEs and microfinance. I think the quality and the complexity of what we have going as an industry-specific solution set is quite amazing. We will talk more about it. We are witnessing an increased churn at the moment. Our growth rates continue to hold fairly steady to what we were doing earlier. Once the churn settles down, you will sort of see that slowdown to our performance. Also, I wanted to sort of, we have seven business lines, right? Roughly, it's not INR 100 crore, but the smallest is close to INR 100 crore revenue.
The largest is close to maybe INR 1,000 crore revenue or INR 950 crore. We have a diversification, which means that even though some of those are interlinked, it also gives us, when one of the businesses is suffering either a macro or an industry-level issue, the ability to deliver on pivoting very quickly to other businesses to focus on. I think that gives us a little bit more resilience. We're not, it's not a one-trick pony. If that gets affected, then you are affected. You know, when there are problems in a particular subsector, we have to understand it's a combination of things. It could be a client-specific issue. It could be an industry-specific issue. I do think that the MSP industry, which is widely fragmented, is already consolidating and will consolidate more given what happened three or four months ago. Will that cause more pain? Possibly.
Is that good for the sector and therefore for a large player like us? Absolutely.
All right. Appreciate that. One thing on this Securens Systems , what I see, at least from the information that is available in the public domain about the company, the company has made losses in the last two years. I mean, 2023, 2024, I don't know if you don't have the information of 2025, but what is your, if you can give some sense, is it more related to the cost or it's more related to the pricing of the services that they were offering? How do we intend to correct the same over whatever one to two years period?
I think we obviously studied the company very well over the years. We also have done fairly detailed diligence. I think they have deployed a fair amount of CapEx to capital for most of the technical capabilities, which gets apportioned over time, and for specific client projects. At a retail level, they have a positive P&L. We think that with our business and merging, whenever we are able to conclude this successfully, merging this will result in overall metrics which are substantially better for the combined unit and even, let's say, Securens on the side if we were continuing to run them on a standalone basis. I don't know. I mean, I said there will be depreciation, there'll be capital earlier, and there'll be a cost of capital which will impact at the bank level. At a retail level, they've always been positive.
All right, thank you.
Also, sorry, I just want to mention that the standalone companies in any sector would generally, I'm not referring to Securens, so don't take this comment out of context. Many small companies, sub-INR 100 crore companies, suffered a lot during COVID because revenue just dried up, because sites shut down. It could be a retail company, it could be an RMS company, it could be anything. Therefore, many of those companies have taken a year or two after that to just get back onto a level playing field in life. Once you go through those, you do lose capital, you do lose some customers, you lose, you know, it does impact the quality of the platform to many levels.
Therefore, you know, there may be variabilities in what losses you may see in a particular year, which could be accruing from some of the investments made earlier and the revenue not flowing through.
All right. Thank you so much.
Thank you. The next question is from the line of Saurabh Dhole from True Beacon Investment Advisors. Please go ahead.
Yeah, hi. Thanks for taking my question. My questions are with respect to the changing industry structure, basically. Firstly, do you think there is an opportunity to get certain specific assets from these delivered companies? It could be in terms of, you know, client contracts, client events. It could be hard assets like collection vans. The second is, how quickly do you see this particular event impacting your pricing path? How quickly will it start, you know, impacting your margins, the EBIT margins for a particular company?
I think on the first part, of course, with respect to what assets are available, certain people, as other people in the industry have evaluated it. The challenge being, as you could guess, for companies which have capital issues and liquidity issues, they have drawn down all sorts of available debt. Removing the tangled web of who, which debtor has what rights over what assets, what's the truly pre-hauled versus what is leased out, has been incredibly complex. For that reason, I think banks decided that the easiest way for them to deal with the issues right now is not to generate another partner to continue running things because they then could ensure, just to give you an example, right? There is somebody who owns the ATM in that particular site, which will be leased out to someone.
There would be somebody else who owns the ACs and the VSATs and so on. For banks, it was much easier to just work with companies like us, help in getting the risk management profit out in terms of cash in those ATMs, and then shut down those sites while they figure out all of these issues, and separately come out with new RFPs for replacing these ATMs and consequential expansion. To be fair, we did analyze this a lot in the February, March, and even preceding time periods. This is way too complex. It's not about going and settling with 2,000 employees. This is about settling with 10,000, 12,000, 15,000 landlords. That's not really up our alley. That's not something we want to distract ourselves with. Also, with many MSPs, there is predominantly a transaction-linked BLA business model.
We have gone bearish on that segment for the last 15 months. Unless we see green shoots in that, either through competitive pricing moving up or the way banks are willing to share the interchange with you or overall ATM transaction levels, we do not think it's worthwhile for us to invest capital and take the risk. Therefore, a large part of the business was in those segments. We are generally bearish on those. Some customers will move to CMS and have moved to CMS on a fixed price model, which is fine by us because then I think the risk return makes total sense for us.
You got it. There is a majority response in the second one, which is on the pricing path.
I think for us, any such situation, you want to, again, I'll go back to one of our maxims. We'll focus on share and revenue growth and maintain our margin profiles. Our margin profiles, if you compare it to anyone listed or unlisted, are substantially higher and better. I think maintaining those margin profiles is very important. These situations help us in continuing to maintain a healthy margin profile. I don't think these are situations where you should be looking at, even pricing change for sure may be slow, but we've seen from what the other company is charging, right? I think we are only willing to do work in which the risk return makes sense for us. Therefore, we would like to continue operating in our margin profile where we are right now. I think that's a very healthy and a balanced margin profile.
If I got you correctly, this particular event doesn't change the margin profile of this vertical drastically?
We will see. I really, you know, will this, will we get operating leverage with more business coming in? Let the business come. I think let's not jump the gun and try to see it. Obviously, if we are able to derive extra margin through automation or other things, we'll be very happy. Right now, let's focus on getting the business and improving our market share and the businesses we like to work in.
Sure. Sure, Rajiv. Thank you so much.
Thank you. The next question is from the line of Rajag opal Ramanathan from an Individual Investor. Please go ahead.
Thank you for the opportunity. Actually, I think you partly answered my question, which related to fixed price contracts versus transaction-based pricing. I believe during my days as a banker, one of the reasons why the banks wanted to outsource was that they were not very sure with respect to the amount of transactions that would happen on the ATM. That's the reason they were quite happy entering into those contracts. What has made them go back against it? Is it because they've been sort of negatively surprised in terms of the amount of usage of ATMs that they wanted to sort of fall back on fixed price contracts? That's the first question. The second question is, it's not necessarily philosophical, but given that you have already built up a competence, and again, you've partly articulated this, why not look at other countries as well?
Maybe not the cash management business, but the other businesses definitely can make a lot of sense in other countries as well. Why not look at that, maybe seed that particular business, build it out over the next five, 10 years or so? Why refrain from doing that? The last question that I have is, actually, it's related to just a minute. I've had made my notes. One minute, please. The AGS shutdown. What has been your learning out of the AGS shutdown? If I were to look at that particular example, I believe they got into trouble because the banks were not necessarily paying on time. That essentially meant that the working capital squeeze was becoming very difficult for them to manage because they had already sort of taken a significant amount of financial leverage. You obviously don't have that.
Are you seeing a situation where getting your monies from the banking system, etc., is becoming a little more challenging than it may have been?
Okay. As you're a former banker yourself, I think the views on what we always had a simple view, which is, right, in a room, I think the smartest people always are bankers, right? When you're sort of working with them or counterparting, you can never second guess on trying to outsmart on pricing and thinking that there is any sort of contractual arbitrage available. We always try to keep things simple, right? Focus, put our head down, execute, do the right thing, and not try to sort of create an upsize or an arbitrage-led pricing model. On the transaction side, I think the main thing that's changed in the industry is the entry of Brown Label ATM was sort of driven on the fact that it's missing there is an opportunity between what the interchange is versus what the cost of doing the services.
Hence, it became a private party's ability to come in and deploy capital. It did that in a sensible place with the right location and cost structure. You could sort of profit here out of that tender. Over a period of time, as with anything else, the interchange increase has been far slower than the cost increases associated with long-term businesses such as this, as a result of which most people who sort of context-hearing on that model have got increased on both sides. In the last two to three years, as the capital to the industry has dried up, you can't have private people coming in with capital which is more competitive than what the banks themselves can do. Banks have realized that ATM is still an extremely important channel of customer service, both for their cardholders as well as for outreach, branding.
They've realized that it's always better to then invest in a fixed price outcome, which helps them hold the parties accountable for a certain quality of service and hygiene and ensure that their customers don't get shortchanged. Hence, to sort of switch over to a fixed price model and acceptance of that. ATMs, I think, wasn't just an issue of customers not paying, right? I think it was a classic issue of liquidity impacting, creating a sort of a downward spiral. It's a public call. I don't want to try and remain diplomatic in alluding to some of the more serious issues there.
Fundamentally, when you have a very leveraged business at a very high cost of capital and depending on a variable transaction-linked model and liquidity issues are impacting revenue to pay salaries, vendors, partners, which affect the downtime and the quality of service that you're able to give to the banks, that quality of service then further impacts the transaction. It's extremely difficult to come out of that spiral. I don't think it is necessarily related to purely banking behavior alone. Also, we are a must-achieve. I think it's a good company that tried to do many things, but it got into an unfortunate situation. I would go to your question. It's a great question. Let me think about the geo one. We have articulated the geographic expansion before.
If I look at the history of large managed services players in India who are pioneers in the field much before our time, I think some of them have tried to expand into Southeast Asia and different markets and fields. From our side, we think of it differently. We are not a cash management company. We are not a managed services company. We are a business services company. We don't want to get into geopolitical risks. We don't want to get into understanding regulators in each market. We don't have the client relationships. We'd rather focus on what we know well, which is how to work in India. We have the scale. We have the reach. We have brand recognition, recall with large banks where we are doing multiple types of services and able to vary in scale.
We will do the harder job of trying to figure out which are the next set of services for us to do well with the Indian banking system or retail rather than take the risk of going out. We have analyzed it. We have done some work. I just think that going out doing JVs and dealing with some of the risk return isn't the right approach for the knowledge this management team has. Can we go hire people to do it? Sure. It's not in the order of priority. I just don't think us being able to execute very well on this. I don't want to do something which will distract us. In fact, on the opposite side, we have had a lot of interest in people wanting us to do cash management in even the U.S. and Australia. For us, this is such a people-intensive business.
While we have a lot of technology automation software which we can take from here to those markets, I just think we want to be humble and think, let's just get this one market right and focus here rather than do this right now. At some point, I'm sure there'll be opportunities. Our M&A team keeps getting inbounds. If there is something interesting, we'll look at it. Till now, whenever we analyze it, we have shied away because the risk return did not make any sense. I think we have a large market in front of us. We have a large opportunity in front of us. We hope to be able to stay focused on that and grow in a steady manner in doing what we know how to do well.
Thanks.
All the best. Thank you.
Thank you. Our next question is from the line of Divyansh Gupta from Latent PMS. Please go ahead.
Hey, Rajiv and team, just a couple of more questions. What is the order book in hand right now, and how much is expected to go live this year, assuming things go as planned?
Okay, do you have some of the questions while we calculate and come back to that?
Sure. The other one was that in respect to the BLA business, earlier calls, we used to mention that we are very selective in choosing our BLA that we would operate, where it gives us decent IRR. Preference, I think, was always to get fixed contracts. In our presentation, we have mentioned only the transaction-linked BLA revenue contribution. What would be the revenue contribution of fixed BLA? Is there a transition happening right now of current transaction-linked BLAs moving to fixed price BLAs?
Thank you for these questions. I think the earlier question also, which Rahm had asked, I just want to, there was a question on why are banks looking at going to fixed price contracts? I think Anush alluded to it also. Frankly, the answer is that there are certain banks who understand that at the transaction volume at their ATM channels, given their profile of customers is more upwardly mobile and therefore using a lot more digital UPI and other means, they will not be able to find good quality partners who would either set up or run or maintain the ATM channel. The economics would just not make sense on a transaction model. For them, the access to an ATM in Europe or a branch to a customer for their own customer satisfaction is very important.
The quality of the service and the quality of the site is very critical. Therefore, they will move to a fixed price model with the higher quality service, which could be asked for somebody else to make sure they're able to deliver a very important, vital service to the consumer. Fundamentally, I think many times people and banks forget the fact that access to cash is a fundamental right of an Indian consumer or of a bank. When banks start thinking of an ATM channel as a profit-making enterprise, I think something goes wrong in my head. I don't know why that mentality has come into the country in the last eight, 10 years in certain banks. Some banks are very clear saying the quality and the brand of the bank is very important.
Therefore, they are, and they know the only way to work with a high-quality player or players would be to go on a fixed price model. I think just that it's not a big trend, but it's a trend in some good banks. Hopefully, this will perpetuate over time. Coming to your question, in terms of order book, I think there's roughly about INR 1,400 crore of order book which is pending to be executed. In the last five quarters, order book, we have roughly gone live with two-thirds of the business. Your last question was on total BLA. Total BLA, so I think the fixed price BLA is covered in a managed solutions part because that's where it comes. I don't know the specifics of it right now, but the transaction-linked BLA is now less than 10%. It must be 8%- 9% of what we need.
8%.
Yeah, 8% roughly. If you see transaction improving, if you see a contract coming at a price which makes sense, where we think we can take the risk return, we'd be happy to go to boy at that time. Right now, this lever of growth, we have slowed down on, right? Many three years ago, when we were going public, we talked about pushing and sizing this business at 15%. We have then divided downwards to 10%. As things change, we will pivot and we will be more conservative where we think our capital is better to hold on to the cash rather than deploy it.
Got it. How much of the order book that is on hand is expected to go live within this year?
That's what I'm coming to tell you. As we go live right now, I think I really can't tell you right now.
No worries. No worries. If you can give an update on the bullion logistics, any client wins, big client wins, or.
Wait for Isaac. We'll come and tell, give you a little, I think we're taking feedback. We haven't really covered retail and bullion today. I don't want my team to be caught off guard. We'll come and tell you at the end of this question.
Sure. Thank you. Thank you, Rajiv.
Thank you. Ladies and gentlemen, this was the last question for today. I now hand the conference over to the management for closing comments. Over to you, sir.
Thank you so much for the detailed questions. I thank you for your patience. Thank you for being investors in CMS. I do want to call out my team for having worked insanely hard over the last five to six months in helping the broader industry navigate the issues they have faced. I think we have had a very solid Q1 in terms of the effort which is going into the business. I think on most key metrics, we are doing well. I know the financial numbers may not fully reflect it, but I do hope in Q2, Q3, we start seeing improvements, which would reflect the quality of effort and quality of the institution in which you're all shareholders. Thank you and talk to you in October.
On behalf of Emkay Global Financial Services Limited, that concludes this conference.