Alpha | CMS Infosystems Ltd. – Equity Research Desk

CMS Infosystems Ltd. – Cash management services

CMS, headquartered in Mumbai, is India’s leading cash management services provider. The company was incorporated in March 2008, by hiving off selected business segments of CMS Computers Limited. CMS was historically engaged in two broad lines of businesses, namely, IT services and print solutions (includes services like financial card management, print & digital solutions and IT infrastructure support, trading of IT equipment(s) & IT training services) and cash & ATM management. During FY2015, the IT business, along with the print division of CMS were carved out and demerged into a new company, namely, CMS IT Services Private Limited. Post the demerger, CMS is involved in cash management and managed services.

Valuation

We believe the consolidation of the market and the company’s track record of incubation new businesses and scaling up its existing business will result in a high growth. Considering the healthy balance sheet, consistent cashflow generations, strong revenue growth potential and robust return ratios, we recommend a BUY rating in the stock with the target price (TP) of Rs.405, 20x FY24E EPS.

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