Radiant Cash Management Services Ltd (NSE: RADIANTCMS) Q3 2025 Earnings Call dated Feb. 14, 2025
Corporate Participants:
Rushil Dedhia
David Devasahayam — Chairman, Managing Director and Founder
Alexander David — General Manager, Operations
T. V. Venkataramanan — Chief Financial Officer
Unidentified Speaker
Analysts:
Abhishek Chawla — Individual Investor
Aditya Sen — Senior Equity Research Analyst
Chandramouli Jagannathan — Individual Investor
Sudeep Samanta — Individual Investor
Unidentified Participant
Jigar Hasmukh Savla — Analyst
Harsha Vardhan — Individual Investor
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q3 FY ’25 Earnings Conference Call of Radiant Cash Management hosted by Antique Stock Broking 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 Rushil Dedia from Antique Stock Broking Limited. Thank you, and over to you, sir.
Rushil Dedhia
Thank you. Thank you, Alvik. Good morning, everyone. We welcome you all to the 3Q FY ’25 earnings call of Cash Management. We thank the Cash Management team to give us this opportunity to host the call. Today with us, we have the entire management team, Operating Cash Management represented by Colonel David, CMD; Mr TV, CFO; Mr Colonel Benz, CEO; Mr Alexander David, General Manager, Operations; and Mr Muktur Raman, Director, Advisor and Strategy IR. Now I hand over the call to MD, sir for his opening remarks, post which we can shift to question-and-answer session. Over to you, sir.
David Devasahayam — Chairman, Managing Director and Founder
Thank you thank you very much, Rushil. Good morning, ladies and gentlemen. Thank you for joining us today for investor call. We are happy to report a healthy performance for this quarter ended, 31, 2024 with a 15.8% consolidated revenue growth and a 26.6% consolidated PAT growth over the same quarter last year. Better performance in our new initiatives of money, wealthy cost-control measures in our core operations and robust growth in-direct clients contributed significantly to this healthy performance for this quarter. Three out of our five key strategic initiatives have performed in a stellar fashion.
Money has grown at a healthy pace both in top, top and bottom-line. Alexander David will speak more on this matter later. Clients have grown at a best pace and today account for almost 15% of our RCMS revenue. Cash run operations continue to grow well and contribute significantly to our growth in revenues and profit. The remaining two initiatives that is Diamond and Logistics and and credit are here to grow to a meaningful scale. These are major investments for us in the medium-to-long term. Management has taken several initiatives including strengthening the sales team and the technological backbone to grow this business at a risk pace in the coming quarters.
The sluggishness in the consumption sectors in the economy has its impact on the core business of retail cash management in the current quarter, which reported a muted growth in this quarter-over the same-period last year. So banks continue to be the prime for. The company is reorienting itself as a business-to-business sales-driven organization across all its businesses. The company is strengthening its sales team in honest reasons to tap the huge markets in retail cash management, volatile logistics, interest-rate as well as taking fintech to the rural areas and India’s the land and we believe that the efforts will bear fruit in terms of healthy growth in the upcoming quarters. The improvement in profitability continued for this quarter. The consolidated EBITDA margins have improved by 221 basis-points from 17.7% in Q3 FY ’24 to 19.9% in Q3 FY ’25. The sharp improvement is on account of the same reasons we cited in the last quarter, tightened cost-control measures and a healthy turnaround in performance of waste money in this quarter. Our cash losses continue to be the lowest in the industry by a wide margin, a result of a robust risk management framework. We continue to maintain the highest-return on capital employed and return-on-equity in the industry. We remain committed to providing transparent updates on our progress and answering any questions that you may have. I will now request Mr Alexander Davis to speak about the progress the season is followed by Mr to speak about the financial performance and APIs KPIs. It’s over to you,.
Alexander David — General Manager, Operations
Thank you, Shaw. Good morning, everyone. Thanks for joining this earnings call. I will be presenting the update on Ace Money, our fintech subsidiary. I’m glad to inform you that Radian Ace HMONE had an excellent quarter and has clocked INR112 million in revenues for this quarter, which is 100% sequential growth over the previous quarter. The rapid scaling has also helped achieved healthy EBITDA margins for this quarter, contributing significantly to the overall consolidated performance of the Group.
I would like to present a few numbers to put our scale-up growth in perspective. We have installed over 52,000 POS machines in the first 3/4 of the current financial year and well on course to achieve our target of 65,000 machines for the full-year FY ’25. Our transaction volume in the current quarter was INR175 crores, again exhibiting healthy sequential growth over the previous quarter. We are continuously expanding both our geographical footprint as well as service offerings to address the untapped markets in rural areas where digital access is still below 50% for merchant outlets, providing huge opportunities for growth.
Strong pan-India network of the parent company provides synergy benefits for these growth plans. The regulatory environment is quite favorable with which continued trust for financial inclusion in rural areas by the government and regulators, which provides the much-needed initial impetus for creating the payment infrastructure.
Going-forward, our focus would be to improve the transaction volumes in each of our outlets for sustained growth over the medium-term. The rest of the financial year is quite promising, both in terms of revenue growth and profitability. We will continue to provide regular updates on the progress of money to our investors as we scale greater heights in the upcoming months. I would now request the CFO, Mr Venkit Raman to President of Financial performance.
T. V. Venkataramanan — Chief Financial Officer
Thank you, Alek. Good morning, everyone. Thanks for joining on this investor call today. I will discuss on the company’s key performance indicators and financial performance for the quarter ended, 31 December 2024. During the first-nine months of this year, we added 51 new clients, 325 new end-customers and 6,744 new retail touch points in our retail cash management business. In this nine-month period, we handled INR1.27 trillion of cash-in line with our recent first quarters. Today, we service close to 77,000 touch points covering approximately 14,000 pin codes across 8,900 plus locations and continue to have the widest headquarters in the industry.
For the 3rd-quarter ended 31st December 2021, the standalone revenue growth was 5.2% over the same-period last year, which is lower than our historical average on account of sluggish consumer demand witnessed across all several sectors of the economy. However, consolidated revenues grew at 15.2%, supported by healthy growth in our fintech subsidiary. In terms of sectoral performance, we witnessed about 10% growth in e-commerce, organized retail and sector over same quarter last year and 14% growth in the petrol petroleum sector.
We also witnessed healthy growth of 47% in the cash operating segment. However, e-commerce logistics witnessed 2% negative growth sequentially. We continue to report strong growth in our — in our direct science segment, which now accounts for about 16% of our standalone revenues. However, BBJ segment is set to stabilize and reported a marginal de-growth in this quarter. The management has redoubled its sales force sales support in the business and our recent launch of, which will help improve the revenue growth in the coming quarters.
Coming to the financial performance, the consolidated revenues for Q3 FY ’25 were at INR1176 million, representing 15.8% growth over the same quarter last year. The consolidated margin for the quarter stood at 19.9%, an improvement of 221 basis-points over the same-period — same-period of the previous year and 89 basis-points over the previous quarter. The continued improvement in EBITDA margins in this quarter were achieved on account of a strong focus on cost-control, two stealthy positive contribution to EBITDA from, which is our fintech and healthy growth and contribution from our cash plan operations.
The management is confident of further improvement in margins in the last quarter of the current year as well. The consolidated return on capital employed for the quarter was 23.6% annualized. Return-on-equity for the quarter was 22.3% annualized. I would like to highlight that the ROCE and ROE for Radiant continues to be among the highest in the industry because of a strong and balance sheet, very low cash loss levels, high fixed turnover ratio and strong working capital management
In summary, the quarter has been a continued wealthy improvement in EBITDA margins over the previous year, supported by strong performance of our Fintech subsidiary. I now hand over the floor for the question-and-answer session.
Questions and Answers:
Operator
Thank you, gentlemen. We will now begin with 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 remove yourself from the question queue, you may press star N2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
We got our first question from the line of Abhishek Chowla, an individual investor. Please go ahead.
Abhishek Chawla
Hello, good morning all. So my first question is regarding lease money. So on the website, we can see you are also into the variable wallets. So could you throw some light how that is performing or that’s insignificant?
David Devasahayam
Can you just repeat the question please? We couldn’t get some background message there.
Abhishek Chawla
Okay. I’m saying as per the Radiant Ace Money website, it is visible that you are into the wearable wallets as well. So my question is, how is that sector particularly performing or is that very insignificant for East Money as of now?
David Devasahayam
Yes, thank you for the question. It is a very insignificant part of the revenue as of now, but it is something which we will definitely look to explore in the future.
Abhishek Chawla
Okay. And the second question is regarding Insta credit. A few calls in the previous quarters, you have mentioned that you are training the on-ground staff to enroll people in credit. So how has that been working out?
Alexander David
Yeah, we have rolled-out our training program across the regions and we do have feet on now to onboard more clients and it is still a very — it’s not a very significant component. So we have not separately disclosed RIC points revenues, etc, but we are hopeful that it will scale-up in the coming quarters.
Abhishek Chawla
No, I’m not asking for any separate numbers. I’m just asking how has been the response of people when they interact with the salespeople. That’s it.
David Devasahayam
Yeah, yeah. We have rolled-out the training and that is in the sense, we have onboarded several clients and the technical, financial aspects of it worked out very well. Thank you.
Abhishek Chawla
Okay. Thank you.
Operator
Thank you. A reminder to all participants, please press star N1 to ask a question. The next question comes from the line of Aditya Sen from RoboCapital. Please go-ahead.
Aditya Sen
Hi, thank you for the opportunity. Sir, one of our peers is going through some issues regarding default on debt. So any color on this, if it is going to benefit us or any of the — any of our peers?
David Devasahayam
We are — we don’t operate in the similar segment as the competitor so-called competitor in the overall industry. They don’t have any significaant impact on our business.
Aditya Sen
It’s okay. And also how are we seeing our revenues and EBITDA going-forward for the next two years?
Alexander David
Yeah, we are — we are on the path of consolidating our profitability and focus on profitable growth and the trend-line that we witnessed in the last 3/4, hopefully, the improvement in profitability will continue. In terms of revenue growth, yeah, the core business growth is a little sluggish because of the overall economy, depending on the economic performance, we are positive that it will exhibit better growth than what we witnessed in the current quarter.
Aditya Sen
All right, thank you.
Operator
Thank you. A reminder to all participants, please press star N1 to ask a question. The next question comes from the line of Abhishek Chawla, an Individual Investor. Please go-ahead.
Abhishek Chawla
Hello. So regarding this quarter, the revenue which we have seen in Money, how much of this revenue is one-time because of the sale of machine and how much of it can we expect to be recurring? Could you throw some light on that?
David Devasahayam
Okay. See, at this point of time, we are in the process of expanding our presence. So as Alex mentioned, we have rolled-out almost 52,000 plus POS machines. A substantial portion of our revenue is from a rollout of machines and transaction revenues will build over a period of time. At this point of time, the revenues are fairly small.
Abhishek Chawla
Okay. So the POS machines, you will command a rental on these going-forward as well or not?
David Devasahayam
No, we may have some AMC revenues, but not rental. We got sold.
Abhishek Chawla
Okay, got it. So in the coming quarters, can we expect the same rollout intensity from year-end for the POS machines?
David Devasahayam
We indicated a guidance of the target of 65,000 machines for the full-year.
Abhishek Chawla
Got it. Thank you.
Operator
Thank you so much. Participants, you may press star and one to ask a question. Thank you. The next question comes from the line of Chandra Moli Chaganathan, an individual Investor. Please go-ahead.
Chandramouli Jagannathan
Hello, sir. When I’ve just seeing your presentation the Radiant valuable logistics is losing money. Is likely to turn profitable?
T. V. Venkataramanan
I’ll take-up this answer. Actually this is a long-term, a medium-to-long term investment for us and with the fact that there are over two lac registered dwellers in the country and valuables you know, is an area it is only going to grow and with greater consolidation over the years. We have invested in this. We have placed infrastructure on-the-ground, which meets the entire requirement of the market. But in terms of the actual business that is coming because valuables are involved. So there is a — there is obviously going to take some time before the customers have and they start making use of our services. So that’s the reason why the quality of our infrastructure is of the highest-level, the best that’s possible even internationally that’s available so that the quality of service delivery on its own with a referal mechanism will gradually build-up this business. But this is a business that we are invested in for the medium-to-long term.
Chandramouli Jagannathan
Okay. Okay. And somebody has asked the same question, maybe I just wanted to — sorry for repeating. The money, you have done about some INR10 plus crores top-line this quarter. Is it sustainable? I mean the top-line and the profitability on a quarterly basis, but what is that we expect in the future?
David Devasahayam
The — our target is a very aggressive target we have internally to work towards growing this business. But beyond this 65,000 machines target, we have not put out a guidance for the next year. Hopefully, in the annual listing next year — next quarter, we’ll be able to give a slightly longer-term guidance on that. The market is fast evolving, but it’s a huge untapped market. We’ve been saying this in the previous calls as well. There are two crore retail outlets in the country and there are about 85 lakh POS machines, so which means 45% penetration. So we balance the 1.1 crore retail outlets, don’t have any form of digital payment at this point of time. And the government is of the matter and encouraging players like us to roll-out these previous machines and bring all the retail outlets into the digital economy.
So to that extent, I think the growth potential is fairly large. If you ask us quarter-on-quarter performance, I don’t think we’ll be able to give that kind of number, but the potential is fairly large.
Chandramouli Jagannathan
So what is that just wanted to two years back Radiant did a bottom-line of about some INR60 plus crores, at least next year, can we expect that you will cross that number? Top-line should be more than that because the EBITDA is comparatively less.
David Devasahayam
Yeah. So this last year and the current year has been in a period of investment for a sustained long-term growth. And as you can see, we have been consistently improving quarter-on-quarter our performance and we expect this trend to continue and hopefully will cross FY ’23 numbers in ’24, ’24 numbers in ’26
Chandramouli Jagannathan
So with the dividend policy, I should continue, sir.
David Devasahayam
Yeah, we have stated dividend policy and likely to remain — that will continue to remain on-track.
Chandramouli Jagannathan
So what is the net cash as on December.
Unidentified Speaker
Okay, earning has gone down. I mean the debt level has gone up. That is okay because deflow has increased because of — we use the only during the last one or two days of the month or the quarter to capture the month-end requirements. That’s another reason why our interest cost has come down, but though the has increased because of the month-end quarter and peaking requirements, the interest cost. So it’s only a temporary phenomenon
Chandramouli Jagannathan
So which will get normalized by end of March?
David Devasahayam
I would not say that, because during the mo month time the requirement is high and gets normalised in the first first week or the next month,
Chandramouli Jagannathan
Sir. That’s all from me.
Operator
Thank thank you. The next question comes from the line of Sudeep Samandha, an individual Investor. Please go-ahead.
Sudeep Samanta
Hello, sir. Hello, David, sir. Actually, first, congrats prop rate set of number. And second thing, every con-call you guys say like our EBITDA margin reached 20% to 25%. But still it’s less than 20%. So when we expect next two-quarter, 3/4, we reach at least 22% or 23% 25% EBITDA margin. This is the first question, please answer.
David Devasahayam
Yeah. Yeah. So as we explained in the previous question as well, we are in the investment mode, particularly the diamond jewelry segment is still a loss-making, down our overall EBITDA margins. We expect it to — the DVD segment to breakeven in the next two quarters or so post which our numbers should improve.
Sudeep Samanta
Okay. And what business we are getting from our DVJ business?
David Devasahayam
It’s hardly — I mean, that’s a top-line, it is fairly small, 1.5% of 11.2% of.
Sudeep Samanta
1.5 CRI or two CR.
David Devasahayam
In terms of — no, for the quarter, we have quarter — this quarter only 1.2. Okay, great. Okay. That’s sure. Thank you.
Operator
Thank you so much. The next question comes from the line of Hardik Doshi from White Whale Partners. Please go-ahead.
Unidentified Participant
Hi, this is Ya from White Whale. So thanks for the opportunity. My question was like, correct me if I’m reading this wrong that your cash pickup and delivery of Q3 last year versus Q3 has degrown by 4% versus network cash management has grew by 12%. But in the revenue model that you mentioned, your cash pickup is actually linked, it’s a fixed amount and which is derived from each touch point, whereas NCM is the variable one. So to your point of consumption slowdown, shouldn’t the numbers be opposite such that your cash pickup and delivery should grow because it’s the fixed amount and your NCM should. So am I reading this wrong or like what’s your take on this?
David Devasahayam
No. The total cash hand a cash burial as well. Okay. So just to explain the — we pick-up cash and deposits in the banks. If it is — the bank has a branch, he will deposit the concerned branch. If the bank doesn’t have a branch, he’ll deposit our account and transfer it to the client electronically. So the second is called the network cash management. The first is the cash pickup and delivery. So the second is a subset of first. So in a sense, network cash management has grown because we have had good increase in Tier-2 and Tier-3 cities, number of points that have added. So that has contributed to healthy growth in the network cash management business. But still even the overall total cash volume handled has grown about to 1.7 or about little less than 2% quarter-on-quarter and about 6.5% sequentially over Q2.
Unidentified Participant
Got it. So just one follow-up question. So you’re saying that the cash pickup and delivery, that degrew by 4%, that is a fixed amount that you derive from each touch point, right? So your touch points have grown or have–
David Devasahayam
No de-growth at all? I don’t know where you’re getting that from.
Unidentified Participant
So what I’m reading is cash pickup and delivery was 65% of your revenues of Q3 versus 60% and then just doing the math–
David Devasahayam
Of the talking about the revenue growth or the volume — cash volume pickup? I’m talking about the revenue growth, assuming that’s a fixed amount linked to the number of touch points.
Unidentified Participant
. So even in the revenue of that quarter-on-quarter for half quarter last year yeah, sorry. Same quarter last year there has been a marginal.
David Devasahayam
Sorry, can you repeat the question?
Unidentified Participant
So my question was that despite the volumes growing, has your pricing dropped because cash pickup and delivery, it’s a fixed amount that you charged from a point that last year versus this quarter. So am I reading this wrong or like has there been like a price?
David Devasahayam
See that fix the price per point depends on what type of points that we have added, whether it is a patrol bunk or a pharmacy will make a of a difference, right, because of the volume of cash that we get. The — and also it is not one-on-one correlated with the cash volume. But as the cash volume increases, the per 1,000 costs will go down if you do the math. So it’s not directly-comparable. The marginal degrowth is on account of, I would say, the mix of points that we have added in this period.
Unidentified Participant
Got it. So my second question would be just a qualitative comment on-market shares in the retail cash management versus last year. Have you seen the competitive intensity increase, decrease or stable?
David Devasahayam
No, I think we are continuing to have a leading market-share in this retail tax management business, we are the market-leader and our reading of the market is that we have maintained our market-share and there is no new players or no change in the competitive intensity of the business.
Unidentified Participant
Got it. Okay. That’s it from my side. Thank you.
Operator
Thank you so much. The next question comes from the line of Jigar Savla from Vihas Ventures LLP. Please go-ahead.
Jigar Hasmukh Savla
Good afternoon, sir. Sir, just wanted to understand on ACE money, what is the kind of margins that you are currently having in this particular quarter?
David Devasahayam
This quarter we recorded a margin of close to about 25%. Okay. EBITDA margin.
Jigar Hasmukh Savla
Right. And sir, if we look at our company, so we had a margin of around 25% to 30% just two years back and now we are around 17%. So when do we expect to reach back to that older level of margins of 25% to 30?
David Devasahayam
It never had 25% to 20% margin. The margin of — few years back, we are about 25%, 25% around 25%.
Jigar Hasmukh Savla
Okay.
David Devasahayam
Yeah. So in current year is — okay, I don’t know, we compute EBITDA margins. I think we were at 19.9% improvement over the last year. But consolidated EBITDA margins are about 19.9% in this quarter is okay. And we expect it to continue to — this is for the quarter. For this quarter, the consolidated EBITDA margins is shared less than 20% and we expect it to improve further.
Jigar Hasmukh Savla
Yeah. So for the financial year March ’22, ’23, we had a EBITDA margin of around 30%. That’s where I was coming from, that when do we reach to that kind of margin?
David Devasahayam
Yeah, it was never 30%, it was somewhere in the range of about 26%. Now I had said this even at the time when we were taking the company public that we have to invest in these new initiatives as we go-forward because these are huge and humongous opportunity areas that are available today in India, which given our network that we have, we have to work towards building on it. And so our expenditures have considerably gone up as a consequence, investing in these areas, investing in our sales force, investing in the requisite infrastructure.
So that’s the reason why it was a conscious decision that we undertook keep at a slight reduction in our EBITDA margins. Now you’ll see there is a consistent growth towards the terminal objectives that we have in mind. And over the upcoming quarters, we will see the requisite improvement in EBITDA margins happening steady in a steady manner as we go-forward and we have seen success in each of these five initiatives.
Jigar Hasmukh Savla
So just getting the so understanding that we are basically expanding for the kind of investments that we are doing, which is rooted to P&L. So then what kind of top-line growth do we have in mind? We have a 25% kind of a top-line growth in mind for next three to five years?
David Devasahayam
Your top-line growth we have said it will be high to you then a.
Jigar Hasmukh Savla
Yeah, thanks.
Operator
Reminder to all participants, you may time one to ask a question. The next question comes from the line of Harsh, an individual Investor. Please go-ahead.
Harsha Vardhan
Thank you for the opportunity. My question is actually regarding our footprint in terms of the number of PIN codes that we serve. And when I compare the Q3 presentation with last quarter’s presentation, I can see that the total number of PIN codes has dropped from 14,88 to about 13,900. So is there any reason for why there is this drop-in number of code service?
David Devasahayam
Yeah. So this is actually correlated with our small degrowth in our e-comm logistics business. Our low — very low-volume points became unsustainable for us to service because of the e-commerce players moving on. So it was a rationalization. But in terms of locations, if you see, we are continuing to increase added more locations within the courts within the existing courts. These — it’s a one-time cleanup of this thing because of the economistics before.
Harsha Vardhan
Okay. Thank you, sir.
Operator
Thank you. A reminder to all participants, please press star and one to ask a question. The next question comes from the line of Abhishek Chawla, an Individual investor. Please go-ahead.
Abhishek Chawla
Okay. So over the past two, three years, could you share some — throw some light on the route density? Like has that gone up or it’s still the same
David Devasahayam
So route density has gone up added about as in close to 7,600 points in this nine months. So that has improved our volattensity. But the overall cash volumes throughput has grown at — and the revenue growth are more or less in tandem. So for all the reasons that we explained as in the e-com logistics and the general overall economic slowdown had resulted in the overall cash volume covering over a period of this nine months, et-cetera at close to 9%, 10% and currently corresponding in that range.
Abhishek Chawla
Okay, okay. And got it, got it. And regarding the jewelry business, as sir mentioned in this call only that it is taking time to onboard customers because there is a trust element involved. So let’s say one or two years down the line, you are able to get those customers. So that same issue of trust is going to help us retain the customer or they will be able to switch if another competitor comes in to deliver the same service?
David Devasahayam
Yeah. So the penetration of organized sector players in the industry is very low, okay. There is still a fairly unorganized like I said, the 2 lakh jealers, registered jealers are there in the country. Our own estimate is hardly 10,000, 12,000 are serviced by other organized players. So the — so we don’t expect competitive intensity to be our growth, rather ability to build that trust should help us achieve bigger scale there.
Abhishek Chawla
Okay, just to say I interpreted it correctly, the jewelers it is the first time they would be using a service like this to transport their jewelry?
David Devasahayam
Some of them, some yeah, many of the many of the smaller generals that we are onboarding will be using a organized player like us.
Abhishek Chawla
Got it, got it. Thank you.
Operator
Thank you so much. Participants, please press star in one to ask a question. As there are no further questions, I would now like to hand the conference over to the management for the closing comments.
David Devasahayam
Thank you very much. I would like to thank all the participants for some really good questions and there’s quite a bit of food for thought for all of us here. This quarter has continued its strength of improvement in profitability on the basis of a healthy growth in consolidated revenue. I am confident of continuing this trajectory with the help of our new initiatives to tap the huge opportunities for growth supported by our very strong management team.
I would like to express my gratitude for your continued support and faith in. We are confident that our continuous efforts will yield promising results for all our stakeholders. Thank you for your time and your continued interest in our company. Thank you very much.
Rushil Dedhia
Thank you, sir. Ladies and gentlemen, on behalf of Antique Stock Broking Limited, that concludes this conference. You may now disconnect your lines.