CMS Info Systems Gets Target Price Cut From Jefferies On Slow Growth In Consumption And ATM Rollout

Jefferies has maintained its 'buy' rating on CMS Info Systems Ltd, lowering the price target to Rs 445 from Rs 580.

The brokerage has cut earnings estimates by 7-10% for FY26-28E to factor in the slower growth in consumption and ATM rollout.

"We maintain buy, as valuations at 14 times FY27E P/E are reasonable in context of 12% CAGR in revenue with steady margins," it added.

The brokerage noted that the management of CMS pointed at softer trends for FY26 & normalisation from FY27.

According to Jefferies, uptick in ATM network expansion will be key, and in retail cash segment, the management plans to keep up with aggressive share gains.

The management expects softer trends to continue in the near term, due to slower consumption activity/usage of ATMs, slower ATM rollout partly due to diversion of attention post bankruptcy of AGS Transact, and cancellation of RFP of 10K ATMs from SBI where CMS was the only qualified bidder.

"In 1QFY26, industry ATM base fell 2% quarter-on-quarter to 246K ATMs. These have dragged performance in 1Q, and this trend can continue for 2Q-3QFY26," Jefferies added.

"Moreover, CMS's stronger competitive position can help to gain market share. Retail cash management is doing well, with CMS breaking into newer segments of e-com, large retail chains, NBFCs, and QSR. It has expanded market share by approximately 4% to 38% in past 2 yrs and aims to expand TAM & gain further share by aggressive pricing," it added.

The brokerage highlighted, in tech and payment solutions, the management sees strong growth potential in its Vision Al (RMS business).

"Over FY25-30, management sees a moderate 12% CAGR in services revenue (organic) and stable margins," it added.

With cash of Rs 10 billion, the management will evaluate M&A prospects across business segments that can drive growth & profitability, Jefferies said.

"Focus is on controlling-stake and buyout transactions. In Jul-25, it announced acquisition of Securens for Rs 800 million to build on its RMS business at approximately 1 times P/Sales vs. approximately 3 times for CMS & sees scope for further M&A opportunities," it added.