CMS Info Systems : We are Assessing M&A Opportunities 2023
According to Executive Vice Chairman and Chief Executive Officer Rajiv Kaul, CMS Info Systems is actively evaluating options for mergers and acquisitions. However, it is very conscious of the values of these firms.
“Both organic and inorganic expansion are actively in our sights. The speaker stated that we’ve been examining the market potential for both stand-alone digital firms and commercial services.
“We have researched businesses in both emerging industries and remote monitoring. We carry out banking. We would want to examine whether we can discover a firm in a new industry,” he continued.
The organization now provides a variety of services. The cash logistics section consists of managing cash at ATMs, managing money at retail locations, and managing money in transportation.
On the other hand, its managed services and technological advancements include card personalization, ATM-as-a-service, the artificial intelligence of things, and banking automation.
The company’s cash logistics division generally accounts for 64% of total sales, while managed services and IT solutions account for 36%.
By 2026–2027 (April–March), the business anticipates that ALGO AIoT Remote Monitoring Solution and ALGO Software Solutions will account for 8–10% of total sales. By 2026–2027, the company’s cash logistics segment will probably account for 58–62% of its total sales.
In 2022–2023, sales increased by 20% y–y to Rs 1,915 crore, and the net profit increased by 33% y–y to Rs 304 crore. By 2024–2025, the firm hopes to generate Rs. 2500–2700 crore in revenues, representing a compound annual growth rate of 17–18%.
Its stock became publicly traded in December 2021.
The company’s promoter Sion Investment Holdings sold an additional 19.4% interest in a bulk transaction earlier this month. It had sold a 13.8% share in the business in June. As of August 10, Sion Investment Holdings owns a 27.1% interest in CMS Info Systems.
However, as it usually is more expensive to borrow via equity than through debt, the corporation has yet to make plans to issue new shares.
“The dilution of fund raise does not make sense as any shareholder today looks at return on capital and return on equity,” he claimed.
After FY23, we had Rs 450 crore in cash. Unless there is a significant opportunity where we need to take on debt, we plan to maintain some money and be supported through internal accruals,” he added.
The corporation has invested almost Rs 400 crore over the past two years to fuel its expansion plans. Funding from self-generated sources is anticipated to be between Rs 150 and Rs 200 crore over the following several years.
As of August 2023, CMS Info Systems, a leading player in the IT and tech-enabled services industry, has announced that it is actively assessing merger and acquisition (M&A) opportunities.
This news comes amid a robust growth period for the tech industry and signifies CMS Info Systems’ ambition to cement its position as a market leader.
The company, already known for its substantial presence in IT infrastructure services, business process outsourcing, and cyber security, is now looking to expand its portfolio.
Mergers and acquisitions have become a shared growth strategy for IT firms, especially in sectors like cloud computing, artificial intelligence, and cyber security.
Companies often opt for M&A to gain market share, acquire new technologies, or achieve economies of scale.
With the increasing technological advancements, it’s about more than just keeping up but leading the change. For CMS Info Systems, evaluating.
By announcing that they are actively seeking M&A opportunities, CMS Info Systems aims to accomplish several strategic goals:
- Market Penetration: Acquiring companies with an established customer base will allow CMS to expand its reach immediately.
- Technology Integration: Companies with cutting-edge technology can integrate CMS’s existing portfolio to create a synergistic effect.
- Talent Acquisition: Mergers often bring in new talents and experts in specialized areas, contributing to CMS’s intellectual capital.
- Global Reach: The acquisition of international companies can offer CMS a straightforward way to enter new markets and diversify its portfolio.
CMS Info Systems is financially stable, backed by annual solid performance and favorable market conditions. This puts the company in an advantageous position to negotiate and finance potential deals. However, financial due diligence will be a critical component of any M&A strategy to ensure that the acquisitions benefit shareholder value.
Any M&A activity will have to pass regulatory muster. This often involves scrutiny over issues such as antitrust laws, data protection regulations, and national security concerns in the tech industry. CMS Info Systems must approach any acquisition with a well-prepared legal strategy to navigate these challenges.
Although no names have been officially released, industry experts speculate that CMS Info Systems might be looking at companies specializing in:
- Cloud Computing Services
- Artificial Intelligence and Machine Learning
- Cybersecurity Solutions
- Fintech Services
CMS Info Systems’ announcement of exploring M&A opportunities indicates a bold and ambitious move for the company. It’s a multi-faceted strategy aimed at expanding market share, enhancing technological capabilities, and diversifying its offerings.
While the company faces challenges, including regulatory scrutiny and the imperative for financial prudence, the potential benefits outweigh the risks significantly. This move may set a new trajectory for CMS Info Systems, solidifying its IT and tech-enabled services industry leader position.
For stakeholders and investors, this is a development worth watching closely, as it could shape the company’s future and, by extension, the competitive landscape of the IT sector.
