CMS Info Systems: PAT growth of 17% & Revenue growth of 18% in FY24 at PE of 21
20%+ YoY earnings growth for 8 consecutive quarters. 15-19% top-line growth guidance in FY25. At a free cash flow yield of 4.6%
1. Largest Cash Management company in India
cms.com | NSE : CMSINFO
39% revenue contribution from Managed Services and Tech Solutions
2. FY20-24: PAT CAGR of 27% & Revenue CAGR of 13%
3. Strong FY23: PAT up 33% and Revenue up 20%
4. 9M-24: PAT up 18% & Revenue up 16%
5. Q3-24: PAT up 14% & Revenue up 25% YoY
PAT up 5% & Revenue up 8% QoQ
6. FY24: PAT up 17% & Revenue up 18%
7. Business metrics: Strong return ratios
8. Outlook: 14-19% revenue CAGR for FY24-27
i. FY25: Revenue growth of 15-19%
FY25 revenue to be between Rs 2600-2700 cr implies a 15-19% revenue growth in line with historic growth of 20%
ii. FY24-27: Revenue CAGR of 14-19%
From Rs 2265 cr revenue in FY24 to Rs 3700-3800 cr by FY27 implies a revenue CAGR of 14-19% for FY24-27
iii. Strong Revenue Visibility: Managed Services
Rs 746 cr recurring services revenue, is 84% of Managed services FY24 revenue & 33% of CMSINFO revenue.
9. PAT growth of 17% & Revenue growth of 18% in FY24 at a PE of 21
10. So Wait and Watch
If I hold the stock then one may continue holding on to CMSINFO
Coverage of CMSINFO initiated after Q2-24 results. The investment thesis has not changed after a reasonable FY24.
FY24 performance provides confidence in the managements ability to to deliver Rs2600-2700 cr of revenue in FY25. CMSINFO looks on track to deliver Rs 3400-3800 cr by FY27
CMSINFO in the middle of a strong run. One can ride along with the strong quarterly performances. 11 out of last 12 quarters delivered YoY PAT growth of 20%+ with 8 consecutive quarters with 20%+ YoY PAT growth
11. Or, join the ride
If I am looking to enter CMSINFO then
CMSINFO has delivered PAT growth of 17% & Revenue growth of 18% in FY24 at a PE of 21 which makes valuations acceptable in the short term.
Revenue growth of 15-19% in FY25 at a PE of 21 makes valuations acceptable in the medium term.
Outlook for top-line growth at a CAGR of 14-19% for FY24-27 the valuations acceptable at a PE of 21 form a long term perspective.
CMSINFO generated a free cash flow Rs 334 cr in FY24 and is available of Rs 7,263 cr of market cap which implies that it is available at a free cash flow yield of 4.6% which makes the valuations reasonable.
FY24 was a very average year and the increased contribution of Managed Services & Technology Solutions in the overall business could lead to a higher growth overall.
Previous coverage of CMSINFO
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