Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Cms Info Systems Ltd (NSE: CMSINFO) Q4 2026 Earnings Call dated May. 15, 2026
Corporate Participants:
Rajiv Kaul — Executive Vice Chairman, Chief Executive Officer & Whole Time Director
Pankaj Khandelwal — President and Chief Finanacial Officer
Anush Raghavan — Chief Business Officer
Analysts:
Siddharth Chappak — Analyst
Unidentified Participant
Praveen Kumar — Analyst
Divyansh Gupta — Analyst
Akshat Hariya — Analyst
Presentation:
Operator
There will be an opportunity to ask questions following the conclusion of the management’s opening remarks. Please note that this conference is being recorded. I now hand the conference over to Mr. Siddharth Chappak from IIFL Capital. Thank you. And over to you sir.
Siddharth Chappak — Analyst
Thank you ladies and gentlemen. Good morning and thank you for joining us on the post Q4FY26 results conference call for CMS InfoSystems Ltd. It is my pleasure to introduce the senior management team of CMS who are here with us today to discuss the results. We have Mr. Rajiv Kaul, Executive Vice Chairman and CEO Mr. Pankaj Khandelwal, CFO Mr. Anush Raghavan, Chief Business Officer and Mr. Puneet Birani, Chief Operating Officer. We will begin the call with opening remarks by the management team and thereafter we will open the call for a Q and A session.
I will like to now hand over the call to Mr. Rajiv Kaul to take the proceedings forward. Thank you. And over to you sir.
Rajiv Kaul — Executive Vice Chairman, Chief Executive Officer & Whole Time Director
Siddharth, thank you so much. Good afternoon everyone. I hope you all have the link to and you can see the web presentation. And I hope some of you at least have had a chance to read our share letter which we published last night. If not, I would recommend you have a look at the letter also in parallel to get a better flavor of what we’re going to talk to you now. Okay, so we’re going to cover the last year. We’ll talk about some of the wins in this year and the shift in our business and we’ll talk in detail about capital allocation and then we’ll quickly move forward towards FY27 and FY30.
Slide number three to summarize FY26 was a hard year even though Q1 was in line with our plans. Q2 saw a sharp impact from four factors which converged around the same time to detail them out there was a significant impact in H1 on consumption linked to a very prolonged adverse climate cycle and geopolitical issues. We think this had an impact of almost 25 crores on our revenue. The SBI cash outsourcing delay caught us off guard with a significant investment in routes and infrastructure. This RFP closure delayed from February to April to December had a huge 100 crore revenue impact for us in the year we learned and we have made fixes in our operating processes post that the off site ATM market contracted after AGS exited the sector and many private and public set of banks were not able to find MSPs who were willing to deploy new ATMs on the transaction fee.
Models. This has affected our ATM cash management business with revenue impact of almost 30 crores. So you told just these three items. The impact to our FY26 revenue was 150 crores on our services revenue base. Had this revenue come in, our rev growth for the year would have been 13% for services and 9% overall. We also, if you remember had mentioned this in Q2, we had to give out larger than usual wage hikes which are linked to a long term employee settlement cycles which are done every three to four years.
So overall for FY26 our revenue grew to 2487 crores which is about a 3% growth and our services revenue which is our annuity revenue that grew to 2312 crores, almost a 6% growth rate on our part. We called for an analyst meeting as soon as things weren’t looking good in September to avoid any surprises and to share with you as we saw the lay of the land changing and we took quick actions to fix and control what we could. In September we told you about what we’re going to focus on to try and arrest this decline.
We have always maintained that a good management team has to focus on balancing revenue growth, market share and margin profile. I think we focus the remainder of the year on protecting our revenue and trying to gain market share. End result is that a cash logistics business grew in market share by 200bps. And at the managed services business we moved from number five to number three position. We have been always a big deployer of technology and leveraging it. We were able to accelerate that using AI and we are able to drive significant cost efficiencies.
Our immediate focus was on our route network and using ML. We are able to reduce our route network by a sharp 10% in the September 25 to March 26 part. Given the overall weakness in the MSP segment, we were able to drive a more sensible commercial model of fixed price contracts. Historically, the industry has not been to get off the transaction fee model and I feel at this stage for all practical purposes the transaction fee model is dead in the ATM business. We in fact ourselves won a contract for 700 crores at a reasonably high transaction fee of 19 rupees per transaction.
But we still chose to stick to our principle of not doing any transaction fee business model deals and we didn’t want to take the risk. Even though this could have meant a 75 crore annual revenue to start with at reasonable margins in the first few years, we chose to preserve that hundred crores of capital for expansion and diversification into businesses which would have a more sustainable return metric after years of strong growth in the prior years. We also examined our longer tail of lower yielding customers and try to drive price increases where possible and in cases where we couldn’t, we migrated some contracts where the prices did not make sense.
We also significantly tightened DSOs around our managed services business segment. Our OCF to ebitda ratio in H2 was 173% compared to a negative 40% in H1. We had told you that we will be making a big investment in technology and even in tough year we continue to do that. In fact, we ramped up our tech investments to almost 40 crores of investment which is 1.6% of our revenue up from our usual 1% of revenue in the prior years. We also made a significant investment in a gig delivery model of about 15 crores.
We feel this is very critical to convert some part of our fixed cost network into a variable cost structure and for expanding our retail business into tier 3 tier 4 markets in India the Q2 deterioration was arrested by Q3 and we sharply recovered in Q4. Q4 saw of 6% Q&Q services revenue growth. In fact if you notice we have given you a 12 quarter trajectory. We had been sort of stuck in the 535 to 575 crore services revenue for eight quarters and have meaningfully broken out. In February we had mentioned that Q3 will be the bottom for us on margins and we aimed to expand margins by 150 to 170bps in Q4 and another similar expansion in FY27.
I’m glad to report that we are able to sharply improve margins by 280bps in Q4. So overall Q4 services revenue is at 609 crores 6% growth. The total revenue for Q4 is 633 crores at 2.4% growth. EBITDA for Q4 at 162 crores which is 15% Q&Q growth but flat year on year Pat for Q4 at 79 crores 38% growth Q&Q but a 19% dip Y or yes the full year numbers on services revenue at 2312 crores at 6% year on year growth and overall total revenue at 2487 crores 3% growth year on year. EBITDA for the year at 600 crores negative 5% and PAT of 303 crores negative 20%.
The EBITDA and PAT numbers mentioned here include the wage code impact. Now for Historical purposes we will show you the segment breakup. However, we have guided you to the fact that segments no longer make sense anymore for us. Because this was our IPO when our business was mostly 70% cash management, 30% managed services. That split since then has moved to 6040 and last year went to 5545 split. Given we are able to drive a lot of our business and growth towards integrated contracts where splitting a margin is not is not possible and feasible.
So on our overall ebit margins in Q4 have gone from last year Q4 was 22.6%. They dipped to 15% in Q3 and have come back up to 19% in Q4 of this year. For the full year ebit margins for FY26 they have contracted by 360bps from 19.2 to 15.6%. Let me shift gears now. After patiently waiting for the right opportunity and the right price and valuations for the last four years, we finally did two acquisitions in FY26. We have kept you periodically abreast of our M and A thinking plans and the sectors of focus.
We have intensely worked on 15 opportunities letting some go after a lot of time analysis and investment of time. Either the sectors finally didn’t make sense to us to take a risk on or the valuations were way out of our comfort zone. All of this experience has sharpened our approach how we quickly screen deals and the terms we operate on the two deals in the year. Specifically, Securance is a key deal for us to scale in the Vision AI segment and to grow this business. The deal has closed and integrated and will be accretive to us in FY27.
In Q4 we signed our contract deal with FSS for the managed services business. This not only helps us consolidate the managed services segment but more importantly for cms it allows us an entry into mid sized private banks for cross selling. It also helps us influence and shift those contracts from a transaction fee model historically to fixed fee models when those contracts expire. We hope to close this and integrate this deal at the end of Q1. We have been able to drive this shift of transaction to fixed fee by showing the value of such contracts to the largest banks in India and the rest of the market will follow in a matter of time.
I’m now on slide number nine. As we talked about M and A, I wanted to talk about capital allocation. This is covered in significant detail in the shareholder letter we have published last night and I would request you to go through that letter. But to summarize our IPO was an offer for sale, no capital raised. Over these five years the company has averaged a high 70% OCF to EBITDA and generated almost 2,275 crores of cash out of which thousand crores have gone in for organic growth into capital investment.
In fact, even if you look at the trends of capex investment, we have invested capital when we have been clear and convicted of the investment opportunity and the returns on it. So we went from an average of 200 crores of capex investment in FY22 and 23 and it dropped to 100 crores in FY24 and 25 as most of the contracts which were being bid were transaction price oriented and the prices are very low and we stayed out of those businesses which affects our FY25 FY26 growth. But we preserve capital for better times.
In FY26 in the middle of the storm we upped our capex spend significantly to drive higher growth in the coming years and we have invested 350 crores of capex and FY26 dividends or broadly in terms of shareholder returns I think have been linked to PAT and have grown each year till FY25. We have returned 438 crores through dividends to shareholders including a special dividend we did in FY25. For to those of you who know us well, CMS is a self funded compounder and not a grow at any cost operator.
Let me pause before I move to slide 10. We are seeing a significant change in the business mix which is critical to our transformation journey and to continue growing at our historical growth rates. This slide shows you a massive shift in the customer mix. In our prior years our growth was led by by the managed services segment and sbi. Due to the transaction fee model being impacted in the country and that affecting the growth opportunity, we have been steadily and consciously diversifying our base to other large banks especially in the private sector and retail segments.
So you can see the sharp shift in the mix which was 5842 and FY25. End of FY26 this mix has shifted to 4852. There’s a very big shift in just one year and will hopefully accelerate in the coming years. Slide number 11 at the Analyst Day we introduced to you a new way of thinking about CMS and we identified the three platforms we think will lead our growth to FY13. The ATM management solutions, the retail and currency logistics business and the technology and payment solutions. These businesses were a 6337 split in FY22 and in the four year period you can see this mix change again in these segments.
It’s 58, 2616. The technology and payment solutions business has had a significant mix change from 7 to 16% of revenue. In fact it was 12% revenue last year itself. This is now a 370 crore business now for us and what is driving the shift is Hawkeye which is now 200 crore revenue and has doubled for us in the last two years through the Securus acquisitions we have scaled this business significantly. We today have 50,000 sites live which are being actively monitored by a software. Think about this, this is a phenomenal scale.
When you compare this to the fact that it took us 20 years to get to 70,000 ATMs 20 years to get to 65,000 retail points, but four years to get to 50,000 retail site to RMS sites. This is targeting a large 8000 crore TAM for us within BFSI which has been historically our strength. We have quickly moved to gain a market leading poll market share of 36%. That is the power of this technology oriented business. We end FY26 with a solid order book not only from size which is 2000 crores but even if we say so, it’s a high quality wins.
None of these deals is linked to any transaction contract. Transaction linked, transaction, fee, link, contract, all of them are fixed fee models. We are especially proud to have had a unique year. We had three huge deals and wins from sbi, ICICI bank and HDFC Bank. These are marquee banks and to have big contracts, long term contracts signed for CMS in these years is huge for us and gives us a good tailwind as we move forward into the coming year. In fact these contracts help us secure 85% of the FY27 target and goal we have.
And we have these contracts in hand and going live end of 25 itself. We have set out our FY27 revenue goal. Despite the hit we took in FY26, we are still maintaining that revenue as a goal. Our services revenue goal remains at 2700 or 2800 crores which will mean a 17 to 21% growth on FY26 numbers at an overall revenue goal. Total revenue we are targeting 28 to 2900 crores which would mean a 13 to 17% growth on margins. We have historically never guided to margins and there are emerging pressures on possible impact of consumption linked to inflation or geopolitical impact.
But we are still aiming to be in the 25% EBITDA margin range. Q4 has helped us significantly ramp up margin profile and we will look to maintain and defend that in the rest of the year. We’ve had a lot of feedback on this topic in the last nine months. It seems to be a favorite topic for many of our investors. Our position on shareholder return has been very clear. We will do what is equitable and fair to all classes of shareholders and in the prior years it didn’t make any sense given we weren’t fully clear on our capital needs for growth.
Also, the taxation structure was unfavorable to many classes of shareholders. The taxation rules since then have changed. We have done two deals. We have invested a significant 350 crores of capex last year and we have weathered the FY26 storm and we are well positioned for the coming years. With clarity on our capital needs and our cash balance of 650 crores, the board has approved 168 crore buyback roughly a 3% of our outstanding equity shares at a 340 rupees price point. After this buyback, we’ll still retain sufficient liquidity for our foreseeable growth needs.
As a team, we are meticulously focused on a higher TAM as a goal for us and to help us continue driving high growth rates. Our three platforms today target a TAM of 20,000 crores. We are seeing a strong market consolidation and linked to that repricing upside opportunity in the coming years. Over the last four years we have grown our services revenue at a 12% CAGR. This includes the slower years in FY25 and FY26. Over the next four years we see our opportunity to accelerate this growth to a 13 14% CAGR which is more in line with our historical growth of 15% CAGRADE.
Thank you for your patience and your belief in a tough year. And with this we end now and move on to Q and A.
Operator
Thank you so much sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may click on the raise hand icon from the participants tab on your screen. We’ll wait for the question queue to assemble. We request all participants to restrict to two questions and then return to the queue for more questions. To rejoin the queue you may click on the raise and icon again. We’ll take a first question from Bedik Sakar on of Unifi Capital B. Please unmute your microphone and go ahead with your question.
Questions and Answers:
Pankaj Khandelwal
Rajiv. Hi. Good morning. It’s been a Tough year overall hope 27 beyond is better for you and the team and thank you very much. Couple of questions. You know like you alluded to in your opening comments, there was softness in Private Bank KTMs and H1 of last year. How’s that sentiment overall behaving today? You know, and that especially in the context of what’s happened in the last two months, they’re all macro at a global level but decision making does, you know come into things at a country level as well.
How are you reading decision makings there? And this question is from the perspective that our guidance of 2,900 crores while is is a a very strong task. The exit that we have in Q4 pegs our revenues at roughly 2500 crores and of course the HDFC wins property adds into what you know number to roughly 2600 CRS. So which means we still need a line of sight to balance the incremental 300. How would you rate the quality of decision making in this environment and you know the probability of us getting the
Anush Raghavan
Hiik Anush here. Let me answer some of your questions. First of all, you know, you let me take the one on what is happening to the overall ATM industry. How are banks thinking about growth? As Rajesh spoke and as you also shared earlier, we are sort of starting to see two or three trends. The first has been the shift in the mix of banks preferring to move from what we traditionally call ATMs which are cash dispensers, into recyclers which enable them to transfer a lot more of the transaction banking activities from a bank branch to an ATM site.
So this can do cash acceptance, it can do video kyc, it can do card issuance. So it’s sort of similar to what a digital banking unit would have delivered. So we sort of start to see banks change that. And the second is a change which is being pushed by primarily CMS of urging banks to switch from a transaction price model to a fixed fee model. I think in some of our earlier calls we had told you how the effective market clearing price for transaction fee has been constantly inching up higher. The last RFP that a single one bank did this came at close to 25 rupees which is anyway is not an economical price for that bank given interchanges at 19.
So in FY27 we know the 6 to 7,000 units that we see in different stages of bank RFP pipeline planning mostly all either product purchase and with subsequent services outsourcing or will be a fixed price price outsourcing deals the second point on how are we thinking about our revenue shift similar to our last call we go at that point in the end of Q3 call when we spoke to you in February was to exit FY26 on a strong revenue momentum so that we enter Q1 with about 650 crores of revenue. So between 577 crores of Q3 to 650 crores of.
For Q1, 609 is sort of a step in between there in Q4. So a lot of the execution and order execution as well as revenue ramp up of some of the new wins that we’ve had are underway. So the 650 should get us to a 2600 crore run rate. It also means that through the year we have to win and deploy about 100 crores of products and the balances things that need to be additional orders which need to be executed. If I look at FY26, we won about 2000 crores of overall orders of which we have close to about 4 to 500 crores of work which is still to be executed.
Pankaj Khandelwal
On the margin front, I understand, you know the fuel inflation is something that has just happened in a typical pricing. How does pass through work on our ATM milk runs? Is this something that we can pass on overnight or do we have to absorb this before this gets escalated?
Anush Raghavan
I think there’s a rhythm in the routine to how we’ve done this. Over the last decade, decade and a half we’ve sort of been as a company and the team been through various inflation cycles, benign ones and more difficult ones. Different playbooks, different tools. Simply put, there are some of our contracts which offer a CPI WPI linked inflation increase. Our effort is to constantly have more contracts move into a regime like that. For the ones which don’t, we do have periodic price resets. So effectively, I think the way I would look at it is as we move from 26 to 27.
We also shared in our analyst meet in September when we met that we are trying to get price increases across a lot of our contracts. So the normal inflation linked increases get set off with price increases which are part of these efforts on an annual basis in case there are some things which are more extraordinary or things that we can’t plan for. It may be certain states which have undergone a much steeper minimum wage increase or fuel price increases which are beyond normal. Those are times where we try to pass on a price increase which is outside these annual cycles.
I
Rajiv Kaul
Think the industry gets together at these moments to discuss with the key Clients again it’s is really client relationships and the value drive. So some of it is. Some of. I don’t think it’s linked to directly linked to headline inflation. I think either is linked to a contractual terms or negotiations which are logically based in what the ground reality is the private sector engagements. It is far different than it will be in the public sector.
Pankaj Khandelwal
No, no, I understand Mine was a very topical question given what happened yesterday on the price hikes. So the simple point being that, you know, does it represent a risk to our 25% margin aspiration? That’s think I’m trying to drive it. I mean.
Rajiv Kaul
No, no, sorry. I think it’s a fair question and you’ve known us for some time. We are very reticent on margin forecast because not always easy to control what the competitors will do and the market will be. I think we’ve had a good Q4. We don’t want to get carried away with extrapolating that straight away into next year. I think we will want to wait and see what happens in Q1. Right now there is just unknown volatility given we all feel in India that a lot of the price impact on fuel may have been deferred for whatever consideration.
So let’s see this play out. We’ve seen one price hike yesterday. I don’t know what more will come in. We don’t know what will happen to Work from Home as a concept right now. So I think we’ll wait for Q1 to see how things pan out. But our effort, given the investments we have made and the nature of our contract, some of the MND we have done is to get 2 or 25% zip code sitting in May. Impossible to tell you today if we will hit it, achieve it or miss it. I don’t think there is significant risk as of today.
But we would prefer to be conservative on this. If we are able to drive the revenue growth I think gives us a better margin to. I mean like last year we talked about and I think in the Q2 or Q3 call we did wean away some of our lower yield retail customers. That’s revenue gone but also lower margin business gone. So if we have to sort of wean away some business at the end of the year if you drop 25, 30, 40 crore revenue to maintain a higher margin profile, we’ll look at that in H2.
Pankaj Khandelwal
Just a beautiful question before I get back. You know there seems to be a ramp up, you know, depreciation cost. I understand the acquisitions have not yet been Closed the FSS one. I’m just curious what’s driving this sequential ramp up from 56 to 59 crores? Depreciation.
Rajiv Kaul
Depreciation wrap up you said? Pankaj can answer. Sorry. Depreciation. There is some change.
Unidentified Participant
So during the year we have done around 350 crore rupees of the Capex and as well as the securance we have already added. So related to that the depreciation has increased from 54 to 59 crore rupees.
Pankaj Khandelwal
And just the last question on the FSS acquisition, you know, sorry, is it expected to be earnings accretive from the first year itself or do we wait before it turns a greater?
Rajiv Kaul
Let’s finish the deal in Q1 and after that we can tell you better.
Operator
Thank you so much Baidik. We request all participants to restrict to two questions only. And if you wish to have any follow up questions please raise your hand and you can rejoin the queue. We’ll move to our next participant Praveen Kumar from Acuitas Capital Advisors. Praveen, please unmute your microphone.
Praveen Kumar
Yes. Hi. Am I audible?
Operator
Yes Praveen, please go ahead.
Praveen Kumar
Hi. Hi Rajiv and team, thanks for the opportunity. The investor letter was very. It read in a very heartfelt and frank manner. Thanks for writing that. Had a couple of questions. One was if I look at your FY27 revenue guidance if I were to do something like a pre mortem on that, assuming, let’s say one year down the line for some reason that’s not achieved, what are the top two or three reasons that happening? That is the first question.
Rajiv Kaul
It’s a great question. Can you tell us a second while we think of the answer to that?
Praveen Kumar
Sure. Second question was on the kind of transaction linked kind of project that you walked away from which, which happened in the, you know, later part of 25. Right. I just wanted to understand who, which of the other, I mean did any of your competitors take up that. And because you know you have been hinting that industry is moving more and more towards the fixed price kind of model. So I was just wondering given that size of contract was it taken up by someone and if so how do you look at that?
Yeah.
Rajiv Kaul
So where we are right now on revenue and I think also referred to that the 633 crores, you extrapolate that right now just out of simplicity into four that gets you to 2500 crores. We are executing and going live on the GFC contract which should get us another 5075 crores of revenue in the year that gets you to closer to the 2,600 crore number. Now we are talking about another 200 crores to hit. I’m talking about the bottom end of the range. Let’s forget the higher end of the range right now, 200 crores.
I think there are orders and order wins which could help us contribute to that delta. What could go wrong on the revenue side right now would be if there is a sharp dip in consumption in let’s say Q1 because Q1 is then into a 4 issue. There could be risk to consumption both at the retail side or at the transaction per ATM level. We have seen in March and April a dip in currency supply in the country which impacts ATM transactions. So I think if that trend continues, let’s assume for the next 1012 months there could be a 50, 70 crore impact on the revenue.
Unlike last year we don’t have. I mean last year forecast was based also on 100 crores of revenue we were presuming would accrue to us from the SBI contract which didn’t happen. We don’t have that risk right now. We don’t have any such large risk which is sort of assumed to happen and not will not and therefore could sort of dip whatever is in the math is a contract either going live or already signed. So there is a delta from 2600 to 2800 crores? Absolutely. I think when the rest of the year we need to go work hard to earn it.
So that’s the answer to your first question. Your second question was did somebody else take the contract? Yes. Should we name it? No. And will those ATMs go live? Hopefully. And will we get some part of the business from there? We should. But again it’s really at 90 rupees I think is a great price because that’s the max you can really get at interchange today for us it was really about could we foresee us making money over a seven year cycle on the contract and we couldn’t. I mean we could but not at the levels and threshold and the return metrics we have.
I’ve said this historically also to some of you is that growing our business is not a challenge. There is business, but growing this business at a 25% zip code and EBITDA margins, the ROC levels is a challenge. And therefore for us to keep aspiring to grow double digits, maintaining that return profile is something we have created as a ring fence around ourselves and we have to keep maintaining the high threshold. I do think there will be some players who can make Reasonable returns on that project, there is a little more risk.
We prefer to take the 100 crores and deploy it when we find a segment or a company where we like the return ratios more in favor to what we prefer.
Praveen Kumar
Thank you. Thanks for the response.
Operator
Thank you so much. Praveen. We’ll take our next question from the line of Omansha of Banyan Tree Advisors. Please unmute your microphone.
Unidentified Participant
Hi sir, Good afternoon. Thank you for the letter and the way you communicate every time. I had two questions. First question was in the analyst meet last year you had broken down the cash logistics business into ATM cash, retail cash and CIT. Can you give that number for FY26?
Operator
Umang, would you like to ask the second question as well?
Unidentified Participant
Yes, yes, I’ll do that. Sure. And sir, we see that off site ATMs are reducing by private sector banks and we also see number of transactions as per RBI data coming down. In this context, why would banks want to increase off site ATMs? That was first part. And second is that between off site and on site ATMs do our services change and if yes, which is more profitable?
Anush Raghavan
Hi Umang, let me answer the second one first. Very good question. It’s a trend that we had called out early that we are seeing a shift between the behavior of on site and off site ATMs. Like I said, I think banks at the point have changed reasons for why they need a certain network and scale. If you’d asked me this question five years back or even 10 years back, both private and public sector banks expanded ATM growth rapidly, mostly on the back of independent ATM deployers or what we call the BLA model.
Executing this on a transaction basis simply because there was a significant arbitrage to be earned between interchange fee, which is what one bank settled with the other versus the cost of running an ATM network. So it made sense for banks to invest and create net ATM capacity which was probably running ahead of what they truly needed in terms of their debit card issuance and spread in terms of savings account. Five years back we started seeing some banks, specifically the private sector banks, changing and taking a pause, saying this is not about having the biggest or the largest network, it’s also about using the network for the right reasons, which is driving penetration and growth in newer areas that they’re entering into.
So if you set up a branch, they typically wanted the branch to be surrounded by one or two ATMs. That helped in building Kaza. It also helped in branding and distribution. Right now if you sort of see what banks are doing. They’re treating the ATM channel as a way to effectively act as an alternate servicing mechanism to their bank branch. So it’s not just about cash distribution or cash withdrawals anymore. It’s also about trying to cater to the customer life cycle and the needs. So some of the work that we’re doing, and Let me take ICICI bank as an example.
Two years back they had I think about 20% cash recyclers and 80% cash dispensers. Two years since now, since we’ve been working with them, it’s gone the other way. We are 80% cash recyclers and 20% dispensers. And now to most of us we still call an ATM and atm. But fundamentally from the views of a banker, a cash recycler provides service to a whole set of customers who are otherwise walking into a bank branch to deposit that cash. These could be SME customers, these could be traders, these could be retail accounts.
But all of this then moves into a cash reset club. Second, as we are going live with the MBS Algo MBS software this year that allows a bank to upsell a lot of the value added services or a lot of the non financial banking services and package that into a cash recycler. So this could be account opening, it could be video kyc, it could be asking for a cross selling a loan which is specific to you as an individual, not just a traditional loan product. It could be instacart issuance, it could be passbook updation in the context of public sector banks.
So I think we are seeing the cycle shift. Banks are willing to commit their own capex as opposed to getting private parties to put up capex here and on the back of this capex they’re looking at transferring a lot of the expensive transaction banking activities from a branch to an alternate channel model. I’ll just go back to your earlier question on the split. I think if you look at it, we also said we will resegment our revenues into the three platforms. So all of ATM cash goes into ATM solutions.
We have retail and CIT combined and we have technology and payment services. The specific mix those splits are captured in our presentation. Yeah,
Rajiv Kaul
I think the cash miss split we said it’s the 60, 40 historically has gone to 55, 45. Beyond that I don’t think we don’t have the live numbers. We are starting to internally just focus on the three platforms and measure them. That split is already mentioned and I think you talked about the transactions and the stability. Okay. Cool.
Unidentified Participant
Thanks, sir.
Operator
Thank you, Monk. We’ll take our next question from the line of Divyansh Gupta of Latent pms. Divyansh, please go ahead.
Divyansh Gupta
Yeah. Hi. I have a three questions for FSS business. The first one being that whatever revenue that FSS was doing, some would be through CMS and some will be through other players. So how are we thinking of moving all of that business to cms or will the contrast expire and then only CMS will take up those business revenue opportunities? The second one is more a basic question and then a build up on that. The fixed fee versus let’s say transaction does it get fixed at FSS level? And if yes, then is there a certain percentage of revenue that FSS is currently doing on transaction basis, which that way leads us to some bit of exposure to that kind of revenue stream.
And the third one is that while we have mentioned that there is a cross sell opportunity of hawkeye and algo MVs, do the current client base do not have that offering and therefore it’s more of a say be doing an inception sale to them that these are the advantages or it’s a replacement of existing vendors and therefore again, how do we see that timeline moving to cms?
Anush Raghavan
So let me go one by one as far as the first question is concerned. So the contracts that we are transferring from FSS would be all the managed services contracts. Now for fss, we are already one amongst the largest cash management partners. So I think when you talk about incremental revenues, it’s mostly the parts that were not attributed to us in terms of the overall managed services for these ATMs and possibly for some ATMs that we are outsourcing to others right now in terms of when we have done our internal math in terms of the focus is really more on getting the customer innovations done, bringing back the quality and stabilizing those networks for the banks.
We’re not really right now thinking too much in terms of arbitrage of what we do versus what other people do. I think fixing the quality and stabilizing the network is our focus right now. For Q1 and Q2 to your second part. Yes, there would be some contracts of this which would have a transaction exposure. However, again, the reason that we are differentiating this from what we typically bid for is in contracts like this which have already had 2, 3, 4 years of transaction history and aging, it’s a lot easier to understand how those ATMs are performing and to take certain calls of what needs to be continue running what investments you need to make to either fix and improve the sites or what ATMs need to be shut down.
It’s an entirely different call from a capital allocation perspective of bidding for a new contract, going and hunting and chasing and setting up those sites and then waiting for the transactions to come.
Rajiv Kaul
So I do want to add here a couple of points here, Divyansh. One is FSS and if you’re aware of the company has run a very good quality managed services business for the last decade. It’s a respected name both in the technology side and what they’ve done for banks and historically done very well for their own portfolio needs. There’s a business they were looking to maybe exit for some time. We as a company have analyzed maybe five managed service providers from acquisitions at different points of stage of time.
In our mind the FSS business is the highest quality business out there in the sector. The client relationships and the profile of the work they do their transaction linked business which is there and I think the very good question has thankfully been contracted mostly to what I would say a high quality base at reasonable price points. There may have been some impact in the last one year to that base of business basis given how overall transactions have occurred. And that reflects the deal value in the pricing which we have negotiated.
And we also have a trend line on when these contracts can end and what we can upsell and how we can convert them. To your question on cross selling with Hawkeye primarily, let’s say Hawkeye and Algo Algo would be new opportunity. It would be new opportunity for us. If you’re able to crack one or two deals, I think they’ll be totally accretive. The Hawk Eye business. I again think that some of the midsize banks haven’t really deployed aggressively or they are doing it. I would say that with a smaller quality or a lower quality vendor and not across the whole base.
Consolidating this also as we said, CMS was a number 5 MSP before even FSS acquisition. We became a number 3 post that I don’t know what happens to the stack rank there but also helps us consolidate and deliver some synergy and cost savings automatically because a team which is going to be handling a larger base of ATMs both at a managed service level itself helps us drive some synergy out there.
Divyansh Gupta
Got it, got it. And the second question was the revenue ramp up that you mentioned. Right. Let’s say 625 into 42500 HDFC around 5260. And just looking from A lower guidance perspective, what would be the ramp up of the SBI and ICICI contract? And rather on a general basis, if we win a seven year or five year deal, how should we think the revenue ramp up happening across years?
Rajiv Kaul
Well, I think you know the Excel modeling. I’ll leave it to you. I think we have given what information we should share about some of these customers and contracts. I think the SBI contract is over a period of 7 to 10 years. The ICICI GFC ones, ANUJ can correct me, is about 4, 5 years roughly. ICICI is longer, ICICI is longer and HDFC is how many years? 5 years. So all of that revenue is not going to be exactly divided by five in the first year. Obviously some of it is linked to either a pricing change or to a base increase.
But for sake of simplicity divided by the number of years and just assume that will flow through for the first year itself.
Divyansh Gupta
Got it.
Rajiv Kaul
Also the bases don’t remain static. Basis change there is churn always if something gets shut down, something gets added. We have take. I would love to say this is very conservative but we won’t know right how the base of the machines changes with some of these banks over a period of time. This is basis what we have right now.
Divyansh Gupta
Got it. And if I may ask another question.
Operator
Sorry Divyansh, rejoin the queue please. Thank you so much. We will take our next question from Govindrajan Chalappa of csim. Govinda Ranjan, please unmute your microphone. Yes please. Yeah,
Unidentified Participant
Hi. Yeah hi. Thanks for taking my questions. I have a couple of them. One, there seems to be heightened activity M and A activity across the globe in this space again so first question is especially on NCR and brings merger would you see any opportunity or to threat do we run a Hitachi kind of risk here? I know things is very small but just your thoughts on that
Rajiv Kaul
And go on the second question.
Unidentified Participant
Yeah, my second question is see you still have a reasonable exposure to 28% I think is what you mentioned to MSPS and that space at least the smaller ones have struggled to find funding. So of the 28% are there still any of the MSP customers of yours who you would classify as at risk in terms of their own balance sheet, their own ability to get funding, their ability to pay you up. And a related question is in your balance sheet I see about 58 crores of loans and advances. I’m guessing that is to a client.
If you could just talk about the thought process around that.
Rajiv Kaul
So on NCR and Brinks Acquisition So we’ll see how this pans out. I’m sure they’ll get regulatory approval to do this around the world. I don’t think we are sort of looking at this and saying they are too small or too big. I fundamentally feel the base we have in the network density we have in India is impossible to replicate. It’s something I mentioned towards the end of my letter also saying you cannot replicate what CMS has in terms of network reach and density. Can that mean that at some point of time NCR as an MSP customer can shift some base to Brinks and Brinks Invest to grow?
Absolutely. But I think we have time to ramp up and therefore I don’t think we are necessary. Our diversifications are linked to that. But I think our expansion business will make sure that we have enough growth to compensate for some of these trends which it happens. Is there any opportunity? I don’t think so. There’s no opportunity. But is there a risk? We presume there’ll be risk. Will that finally pan out or not? God only knows. But I do think this is a more complex global merger. If I was sitting at brinks in the U.S.
My priority would be to focus on the top five markets which for them is U.S. Canada and large geographies in Latin America. These are complex deals where global teams have to align and merge and therefore far away in other countries. Let’s see what the impact is and when it comes in brings. For those of you who are aware or not aware in India is predominantly a player focused on the bullion space and global bullion. They are the largest company and huge and do a great job in that they have some network presence in India but links to basically I think the larger tier cities in the cash management space.
They are a very small player and I think if they had to scale in India this would need significant investments across the country to invest in infrastructure, vans, routes and all to. And let’s see what that happens. We’ll know when we know on this. Your second question was on the MSP base. Yeah. So I think that 28% of. So as we finish FY27 you will or as we get out of FY27 let’s see what the base of revenue from the managed service customers comes into. But you’re right, that sector is going to be as I said the prior growth was led by by some of these customer segments.
The next 4, 5 years growth will not be led by these segments. And so for us to model we are modeling lesser growth from these segments. But the slack will be picked up by our expansion into the new platforms we talked about and some of the newer customers, especially the larger private sector banks we talked about. And your third question was linked to loans advance in the loans Punkage or Anush if you know you can just. I’ll
Anush Raghavan
Just quickly cover this goind so you know, if you, if you recollect about four or six months back in, I think in our third quarterly call we spoke about some of the midsize MSPs being under liquidity stress and us going about solving for this in different ways. So as we speak. And we also said that by end of FY26 we hope to sort of have these addressed. So as we speak, you know, with one of them we’ve, we’ve entirely solved for it. The resource have come down, we have much lesser exposure with the second one.
We made this announcement in FSS wherein post the acquisition will be a combination of our receivables from them plus a cash consideration. And in the case of a third MSP customer, we’ve converted what was our exposure into a secured outstanding which was backed both by physical assets with a significantly higher cover but also more importantly getting access to receivables directly from the bank in escrow facility which covers both the, you know, the loan amount as well as the normal work that we render for them.
Unidentified Participant
Okay. Yeah. So basically you’ve converted unsecured receivables to secured loans. That’s the right way of thinking about it.
Anush Raghavan
Yes. Unsecured or secured plus, you know, getting the collections from their banking customer directly into an escrow account. Yeah.
Unidentified Participant
Okay, just one small clarification. My question on the exposure to msps was not in terms of growth opportunity but in terms of risk of further receivables. Issue of the 28%, do you see any of your customers having any issues on balance sheet?
Rajiv Kaul
No, I think we took a provision last year already in Q2. I think the activities you’ve done both, which Anush detailed about should cover us from any potential risk in this area.
Unidentified Participant
Okay, cool. Thank you. Thank you so much.
Operator
Thank you. We have Darshan Shah from Multi Act Equity Consultancy. Darshan, please go ahead. Darshan, please unmute your microphone so that we can hear your question.
Akshat Hariya
Yeah, hi, am I audible now?
Operator
Yes, Darshan, please go ahead.
Akshat Hariya
Yeah, hi, I’m Akshat from Multiac. I had two questions. The first one is on the margins, right. So while we’ve guided on EBITDA margins, you know, reverting back to 25% plus for FY27 and also for the longer term. But if you really look at the cost structure below EBITDA, right. Our depreciation over last three years has jumped from almost 132 crores to 210 crores approximately for FY26. So you know, as a percentage of revenue also it’s inched by about 1 1/2 to 2 percentage points. So you know in terms of EBIT margins what is the thought process?
And you know, because these investments, when do they yield results in terms of better ebitda margins etc I.e. 1 and second is on the buyback. So you know what would be the participation from, you know Mr. Call on this buyback and what is his view on whether you know, they will be participating in tendering their shareholding? Yeah, those were my two questions.
Anush Raghavan
I think let me tackle the first one which is so be it. I think when you look at FY26 in context you should also look at it in terms of how our overall construct or the structure of our business is changing. We are switching from being a 70% cash business to investing into longer term growth potential especially around technology businesses. Those will necessitate more upfront investment but will yield results and more recurring revenue streams on a 5 to 78 year time period. So the context of capex investment and depreciation would mostly be linked to some of our longer term investments.
And you should also see in the fact in the light that in FY26 we did get headwinds in the form of consumption weakness, slowdown and transaction impact especially for some of our both the ATM as well as the retail business. So in a way sort of the margin and the structures are weathering both of these ups and downs. As we think about FY27 there will always be a sort of a lead and lag effect from an EBITDA and a PBT or a PAT perspective as when you look at Securence or we look at fss. I think we would normally want to assume that it would take a few quarters for the synergy benefits to kick in whereas the depreciation gets recognized from day one.
So we do hope that over a period things should get better.
Rajiv Kaul
Also Darshan, I think in the last couple of years Pankaj has alluded to comments that the right way to think of this rocs rocs apart from this year have been fairly strong in the 25% range. I think we focus on that. To your second question on participant buyback specifically your name called me out but you know I Don’t intend to participate in the buyback at all.
Akshat Hariya
Great, great. Thank you. Thank you for your clarification on both these questions. Really helpful and all the best for the year ahead.
Rajiv Kaul
Thank you.
Operator
Thank you so much Dutchen. We’ll take our next question from Amish Kanani of Noise Investment Managers. Amish, please go ahead
Unidentified Participant
Sir. Congrats on a good 24 margin recovery and you know, top three banks in our bank. First question sir, how do you see the pipeline this year since these three large contracts is already done? You know, how do you see the other contracts? You did mention in the presentation that you know we are looking at from 6 to 8000 ATM looking for moving from fixed fee to fix fee pricing model. But just in general, how is the pipeline visa we say last year, is it looking similar, better or maybe little lower because of the three large contracts that we’ve already had.
And in that context maybe you can cover the fss, you know, acquisition. You did mention we have a lot of mid, mid cap banks, you know, for want of a better words in our kitty. How are we planning to cross sell overall things. So maybe you know, pipeline in the context of those new clients, bank clients that we’ve had.
Anush Raghavan
So you know, very valid points Amish. I’ll just start off by saying, you know despite all the headwinds and the challenges that we are in FY26, I think 2000 crores order wins has been amongst the best years that we’ve had. We’ve executed I think as I said earlier, close to about 75% of this. So there is still 25% of work to be done in terms of this execution. So that’s you know we enter FY27 with just you know, I suspect Q1, Q2, H1 really sort of being fairly intense here from an execution perspective.
Some of these orders to be rolled out, the integration of FSS and just generally looking at how the macro setup is, we do see in FY27 banks coming back into the refresh cycle, they’re taking a pause. In FY26 we see them coming back into this. However, I think it is a little early for us to comment on how exactly this will work out simply because given how the overall situation is, we we do have some RFPs which are in different stages of the pipeline. But I think we would wait to you know, maybe at the end of our Q1 or Q2 call to comment about how exactly this is panning out
Unidentified Participant
Margins. You know we had a fairly good margin bump up in Q4 over Q3 though IOI looks completely flat off. The question is sir, how much? How did we, you know if you can explain the nuances of the margin maybe within cash versus the other business at an EBIT level there’s a huge swing in the cash business. The question is where does this come from and if you can give us some flavor of you know the improvement that has come versus volume versus price increase that we had because of the low, you know pricing that we had in the past.
The question is from 25% we do understand that our aspiration is to maintain but how much is due to say a better pricing versus operating leverage. And you know we understand the fuel price hike is a big overhang. So how do we think, how have we improved it and you know, what are the levers that we are using to kind of make it stable and maybe improving from there?
Rajiv Kaul
So Amish, I’ll just quickly jump in. If you go through our past call, we really don’t get into these level of detail on margins. I think for us given FY26 was a significant dip. We went out on a limb to say we will push back our margin profile. But you’re right, I mean a significant part of the as revenues start climbing back up, you get the operating leverage and the work which Puneet and his team have done on rationalizing our routes, Anush and his team have done on trying to get pricing hikes and the new fixed price contracts, I think they are all starts contributing back to the margin profile.
Your question would be. I also think would be linked to how much of this is sustainable in the future? Don’t know. I think we have a good base Q1 historically. Not historically. Seasonality wise is a lower margin profile basis, wage hikes and increments and whatever happens we’ll wait to see how Q1 goes through. We will also finish all our contracts but then we are almost done all our contract execution. The new one HDFC will go live this quarter and we will have a sense better sense of the year.
On the margin side I think cash and managed services, I told you they are fungible. Really it’s very difficult for us to even call out how much is where overall fuel cost and vehicle cost as a percentage of our business is roughly about 6% of our overall revenue. So if that goes up by X percentage you can start doing some calculations on that. We have built a pretty tight operating network. I also do want to caution here saying as we roll out new contracts and new businesses there will be expansion and investment back into a route network and all.
You can’t exactly time it to quarter by quarter but hopefully we should be able to maintain those sort of margin profiles.
Unidentified Participant
Sure. Thanks. Thanks. And all the best. A great letter to the shareholders. Thanks.
Operator
Thank you so much Amish. We will take that as the last question. I will hand it over back to the CMS management team for the closing remarks. Over to you team.
Rajiv Kaul
No, I mean really don’t have anything more to say. I think we’ve given out this time a fairly detailed letter which normally would have come in the annual report. We thought it’s a good trend to get it more circulated widely at the end of the year for every investor to read that specifies and details out exactly the way we are thinking so that you are able to both get a better sense of the business, what we are doing which can be covered in a presentation accurately and also hold us accountable for it.
We are still maintaining a North star goal of FY27 and FY30 despite having a reset in FY26. Not easy, but we feel quite confident that we have done a superb hard work in the last six, eight months to fix things which were breaking down and the things which were under control and wish us all the best and thank you for your belief and patience in a tough year. And yeah, talk to you at the end of Q1.
Operator
Thank you so much on behalf of IFL Capital Services Ltd. That concludes today’s conference. Thank you all for joining us and you may now click on the leave icon to exit the meeting. Thank you for your participation.