CMS Info Systems Navigates H1 FY26 with Strategic Focus Amidst Transitional Headwinds

CMS Info Systems Limited, a prominent player in India's cash management and technology solutions, reported a mixed performance for the second quarter and first half of fiscal year 2026. While the company faced some transitional headwinds, management remains optimistic about a strong recovery in the second half, driven by strategic initiatives and robust order wins. For Q2 FY26, consolidated operating income stood at ₹609 crore, reflecting a 3% sequential decline. Profit After Tax (PAT) for the quarter was ₹73 crore, a 20% decline compared to the previous quarter, with PAT margins contracting to 12.1%. For H1 FY26, operating income grew marginally by 1% to ₹1,236 crore, while PAT saw an 8% decline to ₹167 crore.

The decline in Q2 revenue was primarily attributed to a temporary dip in ATM cash logistics volumes, influenced by softer retail consumption levels and extended monsoon rains impacting rural incomes. The ATM Management Solutions business also experienced a period of transition and churn, with slower ATM deployments by Managed Service Providers (MSPs) and delays in the SBI contracting process. This led to lower network capacity utilization and a temporary cost overhang. The company also took a prudent provision of ₹10 crore due to payment delays from certain MSPs, impacting profitability.

Segmental Performance and Financial Overview

Segment-wise, the Cash Logistics business reported revenues of ₹395 crore in Q2 FY26, while Managed Services and Tech Solutions contributed ₹271 crore. For H1 FY26, Cash Logistics revenue was ₹812 crore, and Managed Services and Tech Solutions revenue reached ₹528 crore, demonstrating an 18% annual growth in the latter segment. Despite the challenges, the company's EBITDA margins for Q2 FY26 were 22.58%, and PAT margins were 12.06%. The half-yearly EBITDA margins stood at 23.89%, with PAT margins at 13.50%.

Here's a quick financial summary:

Strategic Initiatives and Future Outlook

CMS Info Systems is actively pursuing several strategic initiatives to drive sustainable long-term growth and margin recovery. The company secured robust order wins of ₹500 crore in Q2, bringing total H1 wins to ₹1,000 crore, primarily fixed-price contracts from leading private sector banks. The HAWKAI solution, a key technology offering, is scaling rapidly, with a target to expand to 50,000 sites by FY26 and further to 80,000 sites by FY30. This expansion is expected to significantly increase the revenue contribution from the new VISION AI business.

Management anticipates a strong H2 FY26, with the ATM Management Solutions business expected to return to a growth trajectory and deliver double-digit growth in FY27. The closure of the SBI cash RFP represents an incremental ₹500 crore revenue opportunity over the next 7-10 years. The company is also targeting a 5% increase in ATM pricing and a 9% growth in services revenue in H2 over H1. Furthermore, tech investments in automation are aimed at optimizing network costs, targeting a 10% reduction in routes and transitioning 25% of retail points to a Gig model, enhancing operational efficiency and cost flexibility.

Capital Allocation and Market Position

CMS continues to demonstrate disciplined capital allocation, maintaining a strong cash balance of ₹687 crore in H1 FY26 despite higher capital expenditure and dividend payouts. The company completed the acquisition of Securens, which is expected to yield significant synergies. The overall market for ATM services is consolidating, creating a better pricing environment for CMS. The company's strategy includes expanding its Managed Services business into private sector banks to diversify its client base and reduce reliance on Public Sector Undertaking (PSU) banks.

CMS is committed to its 'PLATFORM' approach, where each business is expected to generate free cash flow to drive its own growth. The company aims for a 'Rule of 35' (Revenue Growth + EBITDA Margin > 35%), emphasizing strong market consolidation opportunities with pricing upside, maintaining high margin quality, and disciplined capital allocation for expansion. With a clear focus on technology-led solutions and operational efficiencies, CMS Info Systems is positioning itself for sustained growth and enhanced profitability in the coming years.