CMS Info Systems: Jefferies Cuts Target Price Amid Slow Consumption Growth
Jefferies, a leading brokerage firm, has maintained its ‘buy’ rating on CMS Info Systems Ltd, but has lowered the target price to Rs 445 from Rs 580. This decision comes amid slower growth in consumption and ATM rollout, which has impacted the company’s earnings estimates.
Slower Growth in Consumption and ATM Rollout
The brokerage has cut earnings estimates by 7-10% for FY26-28E to factor in the slower growth in consumption and ATM rollout. According to Jefferies, the management of CMS pointed at softer trends for FY26 and normalization from FY27. The slower growth in consumption and ATM rollout is expected to continue in the near term, due to factors such as diversion of attention post-bankruptcy of AGS Transact and cancellation of RFP of 10K ATMs from SBI, where CMS was the only qualified bidder.
Impact on Indian Investors
For Indian investors, this development is significant, as it may impact the stock’s performance in the short term. However, Jefferies maintains that valuations at 14 times FY27E P/E are reasonable in context of 12% CAGR in revenue with steady margins. The brokerage notes that the management’s expectations of softer trends to continue in the near term may be a concern, but the company’s stronger competitive position can help to gain market share.
Retail Cash Management and ATM Network Expansion
In the retail cash segment, the management plans to keep up with aggressive share gains. The company has expanded its market share by approximately 4% to 38% in the past two years and aims to expand its total addressable market (TAM) and gain further share by aggressive pricing. The uptick in ATM network expansion will be key, and the management expects strong growth potential in its Vision Al (RMS business).
M&A Prospects and Growth Potential
With cash of Rs 10 billion, the management will evaluate M&A prospects across business segments that can drive growth and profitability. The focus is on controlling-stake and buyout transactions. In July 2025, the company announced the 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. The brokerage sees scope for further M&A opportunities, which can drive growth and profitability for the company.
Conclusion
In conclusion, while the slower growth in consumption and ATM rollout may impact CMS Info Systems’ earnings estimates, the company’s stronger competitive position and growth potential in its Vision Al (RMS business) make it an attractive investment opportunity for Indian investors. As always, it’s essential to do your own research and consider your own risk tolerance before making any investment decisions.
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