Cms Info Systems Ltd (NSE: CMSINFO) Q3 2026 Earnings Call dated Feb. 13, 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:
Unidentified Participant
Praveen Kumar — Analyst
Abhishek Chauhan, — Analyst
Nihar Mehta — Analyst
Prakhar Agrawal — Analyst
Akshat Hariya — Analyst
Suraj Singhania — Analyst
Divyansh Gupta — Analyst
Shivam Parikh — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to CMS InfoSystem Limited’s conference call host hosted by MK 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 the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vinash Singh from MK Global Financial Services Ltd. Thank you. Thank you. And over to you sir.
operator
Good afternoon everyone. I would like to welcome the management and thank them for this opportunity. We have with us today Mr. Rajiv Kaul, Executive Vice Chairman and CEO Mr. Pankaj Khandelwal, CFO and Mr. Anush Raghavan, CBO. I shall now hand over the call to the management for their opening remarks. Over to you gentlemen.
Rajiv Kaul — Executive Vice Chairman, Chief Executive Officer & Whole Time Director
Good afternoon and welcome. This is Rajiv. Let me start with an opening. This has been a very hectic quarter. Before we dive in I want to rewind back and to set some quick context for those of you who may be recent participants. On Our calls in FY22 to 24 we have successfully achieved our three key operating goals and metrics on revenue growth, margin expansion and market share gains. FY24 and 25 saw an increase in competitive intensity and we sat out on most transaction bla RFPs where the pricing was pretty low. We in line reduced our capex spends from average of 200 crores a year to 100 crore levels to preserve capital and to avoid low quality growth.
At the beginning of this year in FY26 we were quite optimistic and positive atm interchange increase had been approved and announced. Our key competitor was winding down operations and we were almost certain to be awarded a large cash RFP which was fairly unique from the country’s largest bank for almost 10,000 ATMs as the sole eligible bidder. This itself would have been 100 to 125 crore of incremental revenue for FY26 which would have been a 4% growth from one contract. And for this we invested in network expansion ahead of the contract. The tide certainly turned in May with severe impact from both external and Internal factors.
We updated you on these in detail in our September 30th analyst meeting. In hindsight, we invested ahead of this contract and our anticipation on things becoming normal was very aggressive given the subsequent delays to that rfp. This has been a big learning for us and since then we have tightened our deployment norms to align strictly with contracted milestone with key customers. But in this volatility we have retained our long term focus and doing the things which we think are right and investing in them. We restructured the company into three platforms, ATM Management Solutions, Retail and Currency Logistics and tech and Payment solutions.
All of these are now at good scale, have market leadership and a strong margin profile with ability to generate free cash flows to drive their growth. We also invested in broadening and diversifying our customer base. We invested for growth in retail and tech segments. In the ATM business our focus has been on higher value and yield and more fixed price contracts. FY’s 26th year to date we have very strong 1600 crore plus of high quality Ottomans. As we enter calendar year 26, things are waving to turn. GSE2 has had a strong positive impact on consumption in the retail segment and we see the segment starting to grow again.
Order wins and execution of the order book is strong and cost optimization efforts are also bearing results. I would now like Anush our CBO to share more details on the business and these initiatives.
Anush Raghavan — Chief Business Officer
Thank you Rajiv. Good afternoon everyone. I’ll spend a few minutes on the business and operational performance for the quarter. The macro environment has been mixed but we are seeing signs of stabilization on the retail side. Cash usage is holding steady which is a strong positive. In fact, if you look at our investor deck, we have shared some information on how on a same store basis post GST 2.0 we have seen volumes rebound meaningfully in our ATM segment. Transactional volumes have stabilized and this provides a floor for deployment planning. In terms of our key business updates, our SBI Cash RFP after intense negotiation was finally awarded and contracted in December.
It is now getting rolled out in Q4. Our total revenue from this is 1000 crores over 10 years of which 500 crores would be incremental revenue to CMS. In terms of other order book, our execution is on track. We have over 750 crores order book just with two customers, ICCI bank and India Post Payment Bank. Both of These are about 75% live. Our tech and payments business is growing from 235 crores revenue to 330 crore revenue in one year and is on track to hit 400 crores in FY27. This is a 30% kgon. I would also like to provide you an update on the higher DSOs from a few mid sized MSPs due to credit tightening by lenders post the AGS issue.
We had alluded to this in our previous call. Since then we have mitigated these risks to a large extent. We had made provisions in Q2 and in Q3. We took strong tactical actions which included limiting services to ensure payment discipline. This has had a negative revenue impact but was necessary to drive cash flow improvements. DSOs are getting streamlined and should be back to normal levels by end of March. On improving margins we have taken the following actions. We are optimizing our network and have exited a long tail of unprofitable retail points. This again has had a small impact on revenue but it ensures a healthier revenue base and good profitability going forward.
The gig operating model for the direct to retail business which was being piloted for most of last year has now scaled to a team of 2,000 plus partners who are covering 20% of our retail points and achieved a certain critical mass. We will also get a more agile and flexible network through this model to handle peak periods and convert part of a fixed cost base to a variable structure. We have strong business momentum building up again. Large customer RFPs are being decided as we speak and this should help deliver a good Q4 and FY27. With that I would like to invite our CFO Pankaj for a financial update.
Pankaj Khandelwal — President and Chief Finanacial Officer
Thanks Anush and good afternoon everyone. Let me take you through the Q3 financials. I will focus on the underlying operating performance as our reported numbers this quarter includes regulatory and one off items. Our consolidated revenue stood at 618 crore, a sequential growth of 1.6%. While headline growth appears modest, the quality of revenue has improved sharply. Service revenue is up 4% on quarter on quarter basis. Managed services and technology is up 18% quarter on quarter from 216 crore to 254 crore. EBITDA and Margin operational efficiency is on track. Business EBITDA grew 9% quarter on quarter to 158 crore rupees.
EBITDA margins expanded by 160 basis points moving from 23.9% in Q2 to 25.5% in Q3. This margin expansion was driven by the two segments Cash Logistics EBITDA up by 6% and margins expanded by 170 basis points. Managed Services and Tech Service Attack EBITDA up by 12% to 78.5 crore rupees. I want to clarify the moment in PBT and PAT to ensure the underlying trend is understood. Reported ppt dropped from 95.6 crore to 88.1 crore in Q3. This is due to specific one off item. In Q2 there is a base effect of one time gain of around 12 crore rupees from the provision reversal of ESOP and performance link incentives.
If you normalize that these exceptional items our core operating PBT has actually grown sequentially reflecting the business and margin improvements in Q3. We have also made one time provision for new labor code of rupees 11.1 crore resulting in PAT after exceptional items for 54.4 crore rupees. Now I’ll talk about the capex and liquidity YTD. Capex is around 275 crore while we have conservative in capex for 24 and 25. This current spend is linked to the execution of around 1,600 crore rupees order book that Rajiv mentioned. This is growth capex not maintenance capex and it is primary driver for the revenue visibility in FY27.
In terms of outlook, business momentum has picked up a pace. In FY25 our EBITDA margin was 26.1% which is dropped to 22.8% in this quarter. However in Q3 we should see that the overall EBITDA margin expanded by 100 basis points to 25.24.5%. This should further improve to 25 to 26% raise for the FY27. With that I hand it back to the Rajiv.
Rajiv Kaul — Executive Vice Chairman, Chief Executive Officer & Whole Time Director
Thanks Venkaj. In our closing I just want to cover three topics. First the revenue mix. Secondly M and A and capital allocation and and thirdly the FY27 outlook. I do want to point out and you can refer this to the slides we have on the investor deck. Our mix of revenue is substantially changing. It’s getting much better and broader over two years from FY24 to year to date FY26 the contribution from a largest customer has reduced from 22% of revenue to 18%. The whole category of private sector banks and the direct to retail revenue that contribution is increasing from 24 to 30%.
The PSU bank revenue contribution is up from 19 to 22% and the revenue we earn from our MSP partners is down from 35% to 29% of revenue. This mix change is going to have a positive impact on margins as we broaden and diversify the nature of our business and the nature of our customers second on M& A and capital allocation. I will reiterate what we have said always our capital allocation priority is first fund organic growth and order book execution. Second, pursue accretive M and A where we see either consolidation opportunities or a synergistic expansion opportunity.
Third, return surplus capital to shareholders through lieutenants. We see as of now a very good or I would say a better M and A environment than we have seen in the past. Earlier this year, on the back of having scaled our Vision AI platform into a market leader, we are able to make an accretive acquisition of a leading player securance. This was our first deal in the last four years. The investment here finally is 70 crore rupees on February 11. A couple of days ago we signed a term sheet for a business transfer agreement with the leading MSP to acquire their ATM Management Solutions business.
The deal value here we estimate to be in the range of 100 to 125 crores and we aim to close this deal by March end. This is going to drive consolidation of the market and and will also be value accretive to cms. More details on this once the transaction closes. At the same time we are closely evaluating deeply other opportunities in both the retail and the payment tech infrastructure sectors on buybacks Given feedback we had both at the analyst call and after from shareholders Given the recent change in taxation which makes it more equitable to all shareholders and also keeping in mind the growth opportunity ahead of us, this has been discussed at the board.
We will be evaluating this in line with better clarity on our balance sheet and the needs of capital by the end of the year and will update you accordingly. Let me move to the third item which is relevant and most important right now is the FY27 outlook. As we have already alluded to CY Calgary at 26 is off to a pretty good start and we hope to retain and build on that momentum going forward. FY25 and 26 saw us defend our revenue position well even though we didn’t grow much but we defined our revenue well and we also maintained our market share amidst a lot of volatility in the overall ecosystem.
Our Hawk Eye business specifically is growing rapidly. We have taken this business from 0 to 100 crore revenue run rate ARR in FY21 to 25 and FY20 sorry FY21 to 24 in 3 years and from FY24 to 26 we are seeing this double from 100 crore to 200 crore level range. More importantly we have now built a strong Enterprise grade product which will be very useful as we bid for some large RFPs coming up in the coming year in new sectors. For hawk I. While Q2 and Q3 were adversely impacted and this has affected margins for the year.
We have detailed these out in our past calls and analyst meeting with Q3. We have bottomed out with momentum strong from execution of order wins. We have. We do forecast a strong positive trend going forward. Overall revenue for FY27 should be in the 2,800 crore to 2,900 crore range. The services revenue component of this should be in the range of 2,700 or 2,800 crores which was the target we set out when we met you in September 30th. The bridge from where we are right now to getting to this is that we are hoping to end Q4 strong.
There are some key deals under discussion and negotiation which we hope to finish strongly by March which will allow us to end Q4 strong. Enter FY27 with a services run rate revenue closer to 650 crores. If you gross it up by four times that will give you roughly a 2,600 crore services revenue for FY27 and then growth in the year should get us closer to the 27 to 2800 crore services revenue growth. At product revenue of roughly about 100 crores. We should be in the ballpark of that 2,800 to 2,900 crore overall revenue EBITDA margins.
Pankaj has detailed out the reasons of us going down and our bridge from there. I mean if you want to summarize our overall dip in EBITDA margins, I would just put them into three factors. About roughly about 1.5% impact in both wage inflation and the investments we made in in building infrastructure for a contract which took time to pan out and then about 1 1.5% dip in margins which is linked to both increase in fleet cost as well as higher overall ECL provisions and risk provisions. These are improving. I think we’ll see improvement of that in Q4 and with the bridge from there to next year we should be able to see EBITDA margins in the 25 to 26% range for FY27.
Thank you. And now we can move on to Q and A.
Questions and Answers:
operator
Thank you very much sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their Touchstone telephone. If you wish to withdraw yourself from the question queue, you may press STAR and two participants are requested to use handset while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. First question is from the line of Praveen Kumar from Equitas Capital Advisors. Please proceed.
Praveen Kumar
Yeah, hi. Thanks for the opportunity. I had a couple of questions. The first one was to get more clarity on the revenue bridge to FY27 which you spoke about. So if I look at it from a different perspective of how much of this bridge to FY27 revenue are things which you have already contracted and have in hand versus where you are counting on, let’s say consumption improving or some other improvements in the broader macro. So if you could break it up into those two kind of components. Thank you.
Anush Raghavan
Hi Praveen. Anisha.
Praveen Kumar
Yeah,
Anush Raghavan
Q3, if you look at it was about 575 crores. As you know, we all shared. I think there’s a lot of work that has happened on the order execution through this year. We also have the large SBI order which is going live in Q4. So that plus a few other deals that we’re in discussion with. The goal for us is right now to just be relentlessly focused on execution and to enter Q1 with the services base of the 577 growing to about 650 crores. So 650 into 4 gets you to 2600, 2600, you add about 100 crores of incremental growth through FY27 and 100 to 125 crores of product that gets you to that range of about 28 to 2900 that we alluded to.
Praveen Kumar
So would you say that this 650 which you’re talking about is largely what you have in hand and you have to just execute on that or is there any, you know, assumption built into that saying that, you know, consumption issues?
Rajiv Kaul
So let me try and give this answer in a different manner because I have to be cognizant of the fact that there’s a team which forecasted very well for three years and then I think the last one month after the forecasts have not really played out. So we will be a little careful right now, Praveen, and therefore bear with us as we build confidence and forecast and reality. The 650 sort of a number. I think we have almost 95% certainty on this number, but we will want to wait to see where we end with March.
And so I think the 650 into 4, the 2600 is fairly certain. The bridge from 26 to 27, 2800. That’s something we have to earn and work for the remainder of the year.
Praveen Kumar
Understood. A couple of other questions. One was on the retail cash management part, I think in your presentation you referred to rationalizing loyalty customers. So I just wanted to understand that earlier you were somewhat, I mean, is this kind of an indication that this is kind of a course correction from your earlier kind of aggression in this part of the market or I mean, just wanted to get some color on that.
Rajiv Kaul
So it’s a great question. I think the way I would phrase is in the last two to three years we’ve been fairly aggressive on this market from market share perspective. Right. As other businesses are scaling very well, we are happy to invest with, you know, aggressive pricing, network expansion. And also we built up a sales engine in the last two, three years to attack and address the D2R customers in a year, which was reasonably tough. I think it was very important for us to look back and optimize our network and look at what makes sense.
We did go and engage and when you’re growing the network, there will always be X percentage of network which is not going to be profitable. Right. As you’re entering newer markets, smaller locations, then I think in Q2, Q3, given the overall trend of the business, we wanted to step back and look at how much of the customers will be profitable longer period. And we took an attempt to see where we can increase prices and where we think the prices just don’t make any sense. So I think what Anush and his team have done with Puneet have done is sort of, I would say just do a sort of, I don’t know what the right word is, but just prune this up in line with making sure that we are building our business and margins in the right line.
Now I think this will be a journey we will go through up and down. Right. When you are in more aggressive and high growth periods, you will, will invest, invest. Some investors will make barefoot, some will not. And then you have a course. Correct.
Praveen Kumar
Understood. Understood. And one other question on the provision that you had taken on, on in terms of the receivables in Q2, I think Anush had referred that, you know, you expect that to stabilize by the year end. So a couple of, I mean, just wanted some clarity on that. One is that what kind of a revenue hit have you taken on, you know, in terms of having to tighten your receivable norms with this kind of customers? And secondly, you know, given, I mean, if you are continuing to see stress in the ecosystem, how much More revenue hit you can expect from this kind of stress persisting in the system.
Thank you.
Anush Raghavan
We’ll answer that question in two parts, Praveen. One is I’ll take the revenue part and I’ll hand over to Pankaj for the provisioning part. The Q2 was a specific provision that we had to take on account of seeing the significant change in the external market conditions and what some of our customers, especially the midsize MSPs were going through post the shock in the ecosystem, the tightening of the liquidity and the credit tabs. Q3 we took a slightly different approach as I shared, which is we were really focused on improving our overall DSO situation. That meant that we had to take certain calls in terms of our revenue exposure but more importantly, how we invested quality and cost in running networks or sometimes, you know, shutting them down.
Not easy calls to take. But the effect of that is visible in the Q3 revenues. With respect to the provisions, Pankaj will just answer that.
Pankaj Khandelwal
Yeah, for risk and ECL provisioning we look into the on an annual basis, not on a quarterly basis. The risk provision for FY23 was around 5% of the revenue which we have reduced to 4% in FY24 and 3.7% FY25. However, this year we are expecting the same to be range of around 4.25 to 4.5% of the revenue. Because the ECL specifically have a lag effect. So as a DSO increases, ECL increases. But as Anush has explained to you, the DSO reduces over a period will impact the reduction in the DCL provisioning in going forward.
Praveen Kumar
Thanks for the clarification. But Anush, could you.
operator
Sorry to interrupt. Mr. Praveen, maybe. Please request you to rejoin the queue for the follow up question. Sir, Several participants are waiting for their turn.
Praveen Kumar
Okay,
operator
thank you. Next question is from the line of Abhishek Chauhan from Eclavia Capital. Please go ahead.
Abhishek Chauhan,
Yeah, I have two quick questions. So the first one is last quarter the management had forecasted 9% growth in the services revenue in H2 compared to H1. So what is the services revenue growth for Q3 as compared to Q2? That is the first question I wanted to ask.
Pankaj Khandelwal
4%.
Abhishek Chauhan,
4%.
Abhishek Chauhan,
All right. And the second is there is a dramatic increase in the employee benefit expense this quarter of about 18 crores. And that looks pretty big for a quarter where appraisals are generally not due. So what was the specific reason of this increase?
Pankaj Khandelwal
So as I explained to you, there was a last quarter in last quarter there is a one off item of around 12 crore rupees wherein we have reversed the provisioning for the ESOP as well as the performance link incentive provisioning. So that is the impact of around 12 crore reduction in the last quarter. Otherwise the total cost, employee cost and service and security cost. There is a reduction in the overall service and security cost and the employee cost. And whenever you look both at both the items service and security cost and employee cost, add both the things and calculate the number.
There is a reduction in considering adjusting of 12 crore rupees and adding with both. There is a reduction in the cost of this thing. Right.
Abhishek Chauhan,
But service and security is different from employee benefit. I wanted to ask specifically about.
Pankaj Khandelwal
12 crore is purely in the employee cost. When we and we when we add about the total employee, employee and workforce cost. Workforce is either our own employee or the third party employees. You have to add both
Rajiv Kaul
the service security includes the outsourced staff which will be working with us. So therefore that’s overall part of the wage cost.
Abhishek Chauhan,
Okay. Okay. All right. Got it. Thank you. That’s all from my side.
operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participant in the question queue, please restrict your questions to two per participants. Should you have a follow up question, please rejoin the queue. Next question is from the line of Rasheep Parikh from Bugle Rock pms. Please go ahead.
Unidentified Participant
Yeah, hi. So I think my question is in continuation to the earlier question on the aggression that we had shown in the retail side. But now we are pruning a little so that I think that part is clear. Can you just help me understand also additionally that how we are looking to take this up going forward and any particular areas that we are targeting. First of all surrounding this, how is the gig strategy deployment working out for us, the challenges that we have overcome and within the growth part, any new areas for Hawkeye or RMS that we are looking to deploy.
Especially when you mentioned that some new sectors we are looking to build the solutions for. So that is my first question.
Anush Raghavan
Let me answer both your questions. As far as the retail is concerned, I think our in terms of our sales focus aggression continues to be. You know what it was simply because we think this is an important part of our future growth. Retail is a very large opportunity and we think of it more in terms of decadal opportunity because the formalized and outsourced as part of what is broader retail in India is still so small. I think the way to think of it is it is our responsibility to do what we can to create this addressable market.
Now as part of that, it will always take a little bit of time for us to figure out the parts of the business which have been onboarded. You need to give them some time, six months, one year, one and a half years for them to sort of achieve full revenue status in terms of translation into what are the estimated realizations and throughput in Q3 post GST 2.0. And as you have shared, for us to start looking at the sector by sector along with the consumption report that we have, it gave us a lot more clarity on the parts of the sector which are seeing more vibrancy versus some deals that we had which probably didn’t.
Given that we were getting into the whole network optimization stage, it made a lot of sense to sort of start taking some calls, which is every business, every operations will have some churn that we would like to impose. It may be 2% of the long tail, it may be 5% of the long tail. That is what we have alluded to coming into Hawkeye. I think we’ve spoken about how within Hawk I itself the goal for us is in the longer term to think about productizing this. The experience that we’ve had and the amount of investments that we made in the technology and the R and D in building a lot of advanced AI use cases will serve very well when we think about translating this into the broader retail.
So in a way when I think about retail, I think the combination of both what we have as a Hawkeye product and the retail cash along with a lot more of technological integration, working into, you know, helping stores with reconciliation and you know, selling automation solutions will. Be a very powerful I think for us.
Rajiv Kaul
I would also like to add to what Anush said. You have to take the feet, you have to keep in mind the industry and how overall retail sales sector in India suffered in H1 of last year we saw consumption. All of you will be invested in other companies consumption really get impacted until September end. So there was a churn in the sector itself. It is a relatively lower margin sector. There were clear sector trend shift from, I mean from physical retail to online retail to quick commerce which is impacting those customers.
From our side, I think today we have almost unused about 150 plus direct to retail logos. 165, 165 customers. This number was maybe 02 1/2 years ago. With these customers we are cross selling. We are not only in the business of retail cash management, we are upselling them in retail cash vaults. We are upselling them with Hawkeye based solutions and where we end up seeing the return make sense from both revenue and margin perspective. We will continue to deepen our presence there. There will be some customers as you work with them six months, you realize the amount of volume of cash and the revenue you can earn is not going to be material at that point.
You need to have a sort of a clinical viewpoint and examine and sort of let go of that and use that network capacity for better quality customers. And that’s what we have done. I don’t think you should read too much into this in terms of change in strategy. I think it’s sort of an aggressive launch and growth. We assess things in the last three, six months to sort of take stock and say what makes sense, what doesn’t make sense. But overall I think we are fairly. What are the word. I think we are seeing a lot more opportunity of cross selling into our retail customers than just pure cash management.
Unidentified Participant
Sure. No, no. My query was also in relation to one of the competitor talking about increased competition in this area on the retail side. And I mean reading the aggressors in this area. So that is what I was kind of.
Rajiv Kaul
I think you’re right. We have ourselves in prior calls said that we are going to be very aggressive in this area because again we feel that will. If you want to grow a market, you will have to make investments whether it’s low cost, low price, deeper market expansion. I think we’ve done that. We have sort of consolidated back right now in this year and we’ll again launch further expansion as we see opportunities in the coming year.
Unidentified Participant
My second question is that for the SBI order, there were talks of 10,000 ATMs that were in freight for the outsourcing. But the announcement that we made, is it pertaining to 5000 ATM? So rest of the ATMs will it be coming in over next year or it’s that particular piece is still away right now?
Anush Raghavan
No, I think the total order is 10,000 in terms of what SBA wants to award. If you go back I think to some of our earlier commentary, in the first version of the outsourcing process, we were the only eligible participant and that would have meant we get the entire 10,000. But unfortunately with that getting scrapped and then coming out with a new RFP of that, we were the L1 participants. So we got about 5,000 of those volumes, the rest going to other industry participants.
Unidentified Participant
Okay, so the rest of it has gone to someone else. Okay, thank you. I’LL get back in with you. Thank you.
operator
Thank you. Next question is from the line of Nihar Mehta from Bay Capital. Please proceed.
Nihar Mehta
Yeah, I just had a couple of questions. One, if Anush can comment on the overall RFP rollout, how is the outlook looking like in terms of new rollout from banks and cash logistics?
Anush Raghavan
So I think for most of FY26 the RFP pipeline has been fairly subdued just on account of the both industry being volatile, banks, you know, struggling with, you know, dealing with the fallout of AGS shutting down, the ATMs, industry consolidating and understanding, you know, where things are. All of that has led to banks sort of making a shift in their outsourcing strategy. And the two key shifts here are they are moving away from or are depending less on ATMs and pivoting more towards recyclers. They see recyclers as being a very strong complement to helping branch transactions.
And the second pivot is moving away from transaction based pricing to fixed based pricing. That is something that at PMS we’ve been advocating for a long time. We stayed out of the transaction market for almost last 12 to 18 months. Now when I think about the RFP pipeline in FY27, we see meaningful activity coming back into the market as we speak. We are aware of almost about 6 to 8,000 ATM units which are in various stages of the pipeline. This means that there’s a total contracted value opportunity of about 2000 crores. I think the timing of when these come out and you know, what we win and how we position ourselves, that’s going to be key.
Nihar Mehta
Okay, understood. And just one more question. What the cat has been.
operator
Sorry to interrupt, Mr. Mehta. You. You’re not audible, your voice is breaking.
Nihar Mehta
Yeah, just one more question. What’s the amount of cash on the books as on December end? Hello.
Anush Raghavan
I’m just asking Pantrix about it. It’s about 600 crores.
operator
Mr. Mehta. Does that answer your question?
Nihar Mehta
I could not get the last part. 600 crores.
Anush Raghavan
Yeah, 600 crores.
Nihar Mehta
Okay, thank you. That’s it from my side. All the best.
operator
Thank you. Next question is from the line of Prakhar Agarwal from Dexter Capital Advisors. Please go ahead.
Prakhar Agrawal
Yeah. Hi team. So thanks for the opportunity. So my question was along the lines of our outstanding order book. I see like we have 11600 crore worth of order books in FY26. So I wanted to understand like which side of our managed services business is this order book tilted to? I mean is this related to mostly software or our banking automation business. If you could provide some color on that.
Rajiv Kaul
It’s mostly a mix of both, you know, integrated contracts on the managed server side and you know, Hawkeye, especially when you look at the large, you know, complex branch RFP rollout.
Prakhar Agrawal
Okay, so this also includes like Hawkeye contracts with our customers.
Anush Raghavan
Yes.
Prakhar Agrawal
Yeah, that’s also my thing.
operator
Thank you. Next question is from the line of Akshat Haria from Multi act pms. Please go ahead.
Akshat Hariya
Yeah, hi. Thank you for the opportunity. So my question was more related to the cash management services. So sequentially if you look at the numbers, we’ve still had a degrowth in the cash management part. And if you look at it, that revenue for that segment has peaked out at around 417 crores and now we are down to around 384 crores. So with the services guidance that you’ve given for next quarter and for the next year, what is the outlook on this specific segment and how much will the SBI order help for this recovery? In this segment.
Anush Raghavan
I think specific to SBI as you have called out, it’s about 500 crores of incremental opportunity over 10 year period. So you should think of that as being about 50 crores per year. The delta between 401-5417 to 385. I think we’ve sort of explained in different ways but fundamentally it’s a link of 2, 3 things. It is a dip in our overall business points or ATMs that we used to handle. The 4,000 odd dip that we had going in from Q1 to Q2 and Q3 that has had an impact. The cleaning up of retail that we’ve done has had an impact.
And also the calls that we had to take to fix our DSO situation has had an impact with most of these either being fixed or normalizing right now. We anticipate this to get improved in the coming quarters.
Rajiv Kaul
Also just I do want to. We have mentioned this before. I would like our analysts and investors both to start looking at our business in total because the managed services business and it itself being a customer of cash management is now ramping up and we have a lot of integrated contracts. So the revenue is actually. And that’s why you see an integration interview, sort of a knockoff as we merge our P&Ls into the three business lines we talked about. ATM solutions will be one complete business line where you’ll see ATM cash, managed services, ground level ATMs, fixed price machines.
All of that will be in one revenue bucket, we think that business overall should grow 15 to 18% next year. The retail and currency logistics business should grow about 12ish percent. And our technology and payments business, which includes Hawkeye and cars, would I think grow about 20% for the next year. So that will give the blend of revenue growth which we are thinking about. We are working to build a P&Ls on these business lines and so that you will be able to see the growth in each category by themselves instead of cash and Ms. And tech.
Akshat Hariya
Okay, Fair, fair, understood. So this question was specifically, you know, from your margin guidance also. So for next year, you know, we are guiding the margins to go back to our FY25 EBITDA of around 25, 26%. And you know, if you look at your old segments, so where we move to new segmental reporting. But since we continue to report old segments also the margins have broadly been impacted due to the operating deleverage that we’ve seen in the cash management service. So you know, the recovery for cash manager services is also important for our margins. And based on the next year margin guidance, it is fair assessment that the cash management also has bottomed out within services and it should grow from these levels.
Rajiv Kaul
Absolutely, you’re absolutely right. I mean I think from a cash management perspective, both from a macro perspective and even from our own, what decisions we had to take in Q2, Q3, the revenue has bottomed out. I think currently the trend line is to grow is already growing higher. And Anush mentioned to it it’s on our invisible deck. If you look at specifically the retail cash volumes, they are very robust even in December and Jan, for segments, our ATM cash management contracts we have from let’s say sbi. And then we think of the ICICI order which is a managed services and cash management order, when I think that will all lead to both the cash management revenue growing as well as the margin profile increasing.
To set you a quick context, we were roughly about 70,000 ATMs under cash management about a few quarters ago which dipped to 68,000. We are back to 70,000 now. We are targeting an aggressive ramp up to 74,000, 75,000 ATMs by the end of March or April. As that ATMs under cash management come in, you will also see the margin profitability while improving back on the overall business.
Akshat Hariya
Understood, Understood, very helpful. So last question is on the cost side. So you know, sequentially I understand that last quarter had some reversals on account of ESOP and bonus for go. But even if I ignore the last quarter and if I look at you know your yoy employee cost so that run rate has gone from around 81 crore to around 100 crore. So we’ve grown that by around 20 plus percent. And your vehicle, sorry your service charges have remained flat. So we are seeing insourcing trend. So you know just wanted to understand the background behind this.
And whether the insourcing trend as you know is complete. And what should be our employee cost and services run rate that we should you know understand going forward.
Rajiv Kaul
So let me give you the philosophy and how what this what has happened and then specifically Pankaj can maybe answer. I’m not to the 1800 crore number right now which you’re referring to the overall employee cost. You should think in conjunction of both employee costs and service security you in source outsource depending on where in the regions are you working and also what nature of business. Some of the higher value, more risk business will always be in sourced. We have had increase in overall employee cost. If you combine the P and LS both two reasons.
One was wage inflation linked to us signing long term wage settlements earlier in the year. We talked about this in Q1. We have a three to four year cycle of signing wage settlements. We normally recoup it back through productivity. But this year given volume growth was low, recouping it back within the year was difficult. But I think we will start seeing that in Q4 Q1 going forward. The second was linked to the fact that we invested and made the wrong decision of investing for capacity. Assuming we were getting the whole SBI contract in April May.
That was with hindsight a terrible call to make. And we’re paying for that and we’re trying to fix that right now. So if you think of the overall number. Pankaj, you want to talk about the overall number which you’re referring to?
Pankaj Khandelwal
Yeah. So if we see that if you add both the service and security and employee cost it has increased around 6 to 7% over Q3 of FY25 to Q3 of FY26. And this is because of the. As we explained to you there is a LTS impact and new business. Whatever we got is impact of related to that.
Rajiv Kaul
And so there’s no. There’s no change in. In sourcing outsourcing. I think for that we are fairly agile in what we need to do for the business.
Akshat Hariya
Okay, Understood. Understood. One last question.
operator
Sorry to interrupt. Mr. Hariya. Maybe please request you to rejoin the queue for the follow up question, sir.
Akshat Hariya
Sure.
operator
Thank you. Next question. Is from the line of Suraj Singhania from Ratnatraya Capital. Please proceed.
operator
Yeah. Hi sir. Thank you for the opportunity. Most of my questions have been answered. Just one question was around your capex estimates for FY26. You had earlier guided for 300 crores of capex. Now we have done 275 crores this year. So what. What is the capex that we estimate. For this year and next year? That’s one and one is the data keeping question which is since business has now been consolidated in our P and L what is the revenues and EBITDA. From the Securance business in Q3 FY26.
Pankaj Khandelwal
So as we have given the guided that our capex will be around 300 to 325 crore rupees and we have already spent 275 crore. We expect that we will in the. Range of 300 to 325 crore rupees. Only securance around 18 crore rupees. Incremental 12 crores. Total revenue of 18 crore rupees. So incremental revenue of around 12 crore. Rupees in Q3
Pankaj Khandelwal
and securities will have actually a negative PBT because we will be front loading the depreciation on that assets.
Suraj Singhania
Got it. Got it. So 6 crores was accounted in the last quarter. If I understand that. Thank you.
operator
Thank you. Next question is from the line of Divyansh Gupta from latent pms. Please go ahead.
Divyansh Gupta
Hi, one question. You had mentioned that the contracts now moving from let’s say cash machines to recyclers. So the question is that as recyclers do the number of trips that we have to do reduce and therefore lead to our revenue pressure for us going forward or we price it in and increase the realization.
Anush Raghavan
No Divyansh. I mean if I look at our current base also recyclers are a lot more have a lot more complexity than ATM especially in terms of how they need to be managed and more importantly serviced. The expectations from customers is also that the quality of service and uptime on these machines have to be of a much higher order. Generally recyclers are deployed at on prem branch sites which means that they generally have a higher footfall. And so banks are very keen to sort of for example if at ATM they need a 95% uptime recyclers is almost 97, 98%.
So to us we actually see recyclers as being sort of an upsell and a higher value solution than ATMs.
Divyansh Gupta
But when you say uptime it means More cash availability or I’m assuming it means more cash availability, but given that.
Anush Raghavan
End user availability right now, which could be cash availability, which could be, you know, how do you fix the faults? It could be things to do with the software, things to do with the hardware, but end user availability.
Divyansh Gupta
But sorry, just to double click on it. See, assuming that machine of an ATM and a cash recycler both are of sufficiently good quality, then let’s say non cash metrics will largely be same. And given that the customer can deposit cash, the cash out situations will reduce. So therefore does it reduce the number of trips. That was my.
Anush Raghavan
I think you should look at, you know, what a recycler means to different stakeholders. To a bank it definitely brings about a greater degree of efficiency in terms of how the currency is utilized. It is effectively less cash afloat to us. We also like a recycler model simply because both eurotechnomics wise and in terms of the complexity, it is a higher value, which means that in terms of the monthly fixed fee, it is usually pegged above an atm. Now the number of visits might be lesser in certain cases, but that doesn’t really change the nature of the revenues simply because the amount of work that still needs to be done, especially in an atm, you only need to withdraw cash and load it.
In a recycler you might have to load it, you might have to evacuate it. There is a lot of reconciliation work that also needs to be done. So it’s not as plain speaking as that, but net net it ensures to us higher realization than what a normal ATM would do to a bank. It’s not necessarily higher cost because they need to look at it in terms of what a cost of a branch transaction is vis a vis what that of a recycler would be. So it is generally a more efficient way of managing things.
Divyansh Gupta
Understood. And the second question was in the analyst day deck, right? We had mentioned that we have 38% market share in the retail cash management, but at least that my understanding was that currently we do not have pricing power or we were looking to increase pricing after some time. So is there a target market share which will allow us or how should we understand that when should pricing ability to price it higher for retail cash management can be expected?
Anush Raghavan
Let me take an analogy on the ATM business, or rather when I look at what we gain in terms of our ability to both influence the market as well as influence our own outcomes, I think with each step change in our overall market share, it creates a very different kind of an outcome. And we’ve seen this, we’ve seen, you know, what CMS was 15 years back 10 and now especially in terms of the way we’ve been able to unlock incremental EBITDA margins as we scaled up in the ATM business, as we went from a 35 to 40 to 45, 50 and closer to 57, 58% market share, all of that step change has had a differential outcome in terms of pricing route optimization.
Right now in the retail, I think we’re in a zone where we are focusing more on yield management and yield improvement which means that we are sort of evaluating things on a contract by contract basis. Our focus there is really to continue to increase market share, to continue to expand the addressable market opportunity and to invest in both building the sales capability as well as using that to cross sell into technology solutions.
Rajiv Kaul
I think the way I would ask you to think about it, and this is a question we ask ourselves, right? First of all, you want to defend your revenue and market pull check in the market. That’s the most important thing right now. You don’t want to suffer on revenue and market position. Margins can go up and down. We are fortunate in many ways to have a margin profile which is substantially better than anybody else we know of internationally or locally. Maintain that margin profile and growing revenue rapidly. Both of those are not easily possible. So something has to give at some points of time.
I would argue now with hindsight, the last year has seen the opposite happen where we defended market and revenue and therefore has had some impact on margins. Possibly we will hope to undo that in the coming 2, 3/4 specifically to retail. And I think Anu said we will look at our network and look at our capacity to see how we can keep growing revenue at a sensible margin profile. And is there a particular market share number where it makes sense? I don’t know. Right. I mean I think if you have one competitor who is willing to anyone.
Right now there are four competitors in the the sector. If you have only two, the second one can keep aggressively being aggressive on pricing maybe. Right. So really you can’t determine when and how much pricing power you can get. I think if we can keep focusing on quality, cross selling to the customer, other lives of businesses, I think you’re fine.
Divyansh Gupta
Understood. And just one last question.
operator
Sorry to interrupt. Mr. Gupta. May we please request you to rejoin the queue sir for the follow up question. Thank you. Next question is from the line of Shivam Parikh from Value Wise Wealth Management. Please go ahead.
Shivam Parikh
Yeah. Hi sir. Good afternoon. Thanks for the opportunity. So we are having a good cash position of around 600 crores in our books and having a great balance sheet as well. So also with us being market leaders in the business that we do and further consolidating our market share furthering in the. In tough times last financial year and this financial year. So are we thinking of enhancing shareholder value through buybacks to gain advantage of the low valuations currently?
Anush Raghavan
I think perhaps you have joined late in the initial part of our opening remarks. As Rajiv mentioned, given the changes to the buyback regulation that have been announced, we feel that right now it is a lot more equitable for all stakeholders as opposed to the earlier regime. This is something that has been discussed at the board level. We will evaluate this closer to the end of this year as we look at our overall capital needs in terms of growth capital. M and A.
Rajiv Kaul
Yeah, I think we do have a fairly active M and A pipeline. We’ve been working on that for a long time. We are looking at investing for growth. As I said, our priority is simple, organic, then inorganic and then returning capital shareholders, whether that’s through dividends or or buybacks. I think we will take the. We will have the board discuss that at appropriate time. Right now we are seeing active opportunities in the M and A pipeline. We don’t know that doesn’t mean these will happen. We will continue working on them and what makes accretive sense for us to build and scale our business in with good returns.
I think that’s the first priority for us as a team, to us and to our shareholders.
Shivam Parikh
Okay. So sir, with you seeing buybacks favorably for us. So you are seeing.
Rajiv Kaul
Let me clarify. It’s not about seeing buybacks favorably for or unfavorably, I think buyback because there has been a constant ask and question on buybacks. We want to address it proactively in line with our capital allocation philosophy which we have entailed out. We’re not saying a buyback is going to happen or not. If we do see excess capital and we don’t have a need for it, we then will evaluate returning it via dividend or buybacks as the board deems fit.
Shivam Parikh
Okay. So sir, if any buyback was to be possible, so can we expect in financial year 27 or this year? This financial year?
Rajiv Kaul
I don’t think I could forecast this at all. This is not a decision which a management team makes. I think we’ve been fairly clear on the way we think about it. We will let you know end of the year if there’s any change to.
Shivam Parikh
The thinking also with buybacks being taxed unfavorably. So does that have a bearing on our decision? That was my last question.
Rajiv Kaul
Certainly. Yes, absolutely. You’re right. Because we have to think of capital allocation with light of all of that. That’s why we have proactively talked about it. Not to say that there’s something happening just to share with you how we think and we are clear to our shareholders equally to give you an answer on our thinking. We do see capital needs for the growth of the business both organically and organically. If after that we see a sufficient cushion for us to return capital, we will definitely look at it.
Shivam Parikh
Okay, sir. Thank you, sir. That was very helpful.
operator
Thank you. Ladies and gentlemen, we will take this as a last question for the day. I now hand the conference over to the management for the closing comments.
Rajiv Kaul
Thank you so much. Thank you for your Q and A and for all the questions you asked us. I think I’ll summarize by saying that yes, we’ve had two quarters of disappointments numbers. We are hoping to turn the tide with Q4 and going into FY27 strong. I know there’s a revenue forecast which may seem a little aggressive given the Q3 specific numbers and the last 2, 3/4 of sort of underperformance, but we’re hoping to turn it and deliver stronger numbers for you and for us to meet our own internal target which we had set for FY27 of 2700-2800 crore of services revenue and overall revenue of 28 to 2900 crores and with an EBITDA margin of 25 to 26% for the year.
Thank you.
operator
Thank you sir. On behalf of MK Global Financial Services limited That concludes this conference. Thank you all for joining us. And you may now disconnect your lines.