CMS Info Systems Ltd

NSE:CMSINFO

Earnings Call Analysis

Strong Revenue Growth and Robust Performance Amid Challenges

CMS Info Systems exhibited a commendable performance with a 17% revenue growth, reaching INR 599 crores, and a 13% increase in adjusted PAT to INR 98.5 crores, despite the election headwinds. The Cash Logistics segment added 3,000 new points, totaling 140,000, while the Managed Services & Technology Solutions sector saw a 31% revenue surge to INR 239 crores. Exciting advancements are underway, particularly in IoT RMS technology with a pioneering project for a leading bank. For FY '25, the company confidently anticipates achieving its revenue target between INR 2,600 crores and INR 2,800 crores, reflecting a 15%-19% growth.

Strong Revenue Growth Amidst Challenges

CMS Info Systems has reported a robust Q1 FY '25 performance, showcasing a 17% revenue growth, reaching INR 599 crore. This growth is particularly notable given the challenges posed by a long election cycle, which affected cash velocity in major states. The company's adjusted profit after tax (PAT) increased by 13% to INR 98.5 crore, resulting in an adjusted PAT margin of 16.4%.

Diverse Business Segments Fueling Growth

The company's Cash Logistics segment continued its steady growth, achieving a 10% year-on-year increase, contributing INR 387 crore to revenues. In stark contrast, the Managed Services & Technology Solutions sector demonstrated strong growth of 31% year-on-year, reaching INR 239 crore, and showcasing a 20% EBIT growth with margins at 17%. This indicates a significant shift towards higher-margin services.

Investments Driving Future Growth

CMS is actively investing in advanced technologies such as its IoT RMS tech stack. A significant highlight was a major win—a first-of-its-kind RMS project with a leading bank involving 2,000 locations. The project includes developing over 10 new AI and ML modules. This ongoing investment into tech-driven solutions positions CMS for future growth.

Growth Guidance and Market Opportunities

Looking ahead, CMS has provided a revenue guidance for FY '25 between INR 2,600 crore and INR 2,800 crore, which translates to a year-over-year growth estimate of 15% to 19%. This guidance aligns with Q1’s performance, indicating solid momentum moving forward. The company also anticipates the successful execution of a majority of its order book over the next six months.

Positive Trends in Cash Management and Retail

A key macro trend driving CMS’s performance is the formalization of the economy, positively impacting retail cash management. The company successfully added 3,000 business touchpoints, totaling 140,000, reflecting a strategic focus on expanding its footprint in retail cash management. The management is optimistic that consumption patterns will strengthen in Q2 and Q3, fueled by the festive season.

Evolving Industry Dynamics and Strategic Focus

The company acknowledges the increasing competitive intensity in cash logistics and emphasizes the importance of creating unique partnerships within the fintech ecosystem to enhance market opportunities. The ongoing discussions around ATM interchange changes present potential for growth in their infrastructure business, should rates improve.

Financial Health and CapEx Investments

CMS has outlined a capital expenditure (CapEx) plan of INR 300 crore for FY '25, significantly up from INR 99 crore last year. This investment will primarily focus on supporting new project wins and technology enhancements, which are critical for sustaining the high growth trajectory across its various business segments.

Operational Efficiencies and Risk Management

Despite concerns about margins, the company noted that the EBIT in the Managed Services segment is on track, with quarterly fluctuations expected. The risk cost has been managed down to around 4%-4.5% as of FY '24, down from 5.1% in FY '23, highlighting improved risk management practices.

Future Outlook and Growth Strategies

CMS remains committed to delivering strong double-digit growth, reinforced by its mixed portfolio of services. The company anticipates that the continued diversification into Managed Services will increasingly contribute to revenues, expecting this segment to stabilize around a 40% contribution by FY '25. Overall, the management is confident in achieving its stated financial targets while exploring new opportunities for expansion.

Earnings Call Transcript 2025-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to the CMS Info Systems Limited Quarter 1 FY '25 Earnings Conference Call hosted by Novama Wealth Management. [Operator Instructions] I now hand the conference over to Mr. Nikhil Choudhary from Novama Wealth Management. Thank you, and over to you, sir.

[Unknown Analyst]

Good morning, everyone. On behalf of Novama, I welcome you all to CMS Info Systems Q1 '25 earning call. We have with us today the management of CMS Info Systems, Mr. Rajiv Kaul, Vice Chairman, Full-time Director and CEO of the company; Mr. Pankaj Khandelwal, Chief Financial Officer; Mr. Anush Raghavan, President, Cash Management Services. I now hand over the call to Mr. Rajiv Kaul for his opening remarks. And post which, we can open the floor for Q&A. Over to you, Rajiv.

[Rajiv Kaul, executive]

Thank you, Nikhil. Good afternoon, everyone. Thank you for attending our Q1 FY '25 call. I'm happy to report another strong quarter of 17% revenue growth and adjusted PAT growth of 13%. Q1 usually has the seasonality impact, which this time got further impacted by a fairly long election cycle, which has impacted cash velocity in several large states. Despite this, we have maintained momentum on our touch point additions in our Cash Logistics business, where we added 3,000 points in Q1, and we totally now have 140,000 points.

In our Managed Service & Tech business, our order book wins for the quarter were fairly robust at INR 200 crores. We are investing fairly aggressively in developing our IoT RMS tech stack, and I'm very happy to report that we had a large win, which is also first of its kind RMS project at a leading bank.

This is a sort of a unified build and operate mandate for integrated surveillance transformation project across 2,000 locations for this bank. And the solution is going to include a 24/7 centralized on-prem command control center, which will lead to converge with the bank's tech stack and will also involve us developing 10-plus new AI and ML modules.

With this, I will hand over to our CFO, Pankaj, to take you through our Q1 financial highlights.

[Pankaj Khandelwal, executive]

Thank you, Rajiv. Our consolidated revenue has grown 17% to INR 599 crores led by strong growth in Managed Services & Technology Solutions businesses. Adjusted PAT has grown by 13% to INR 98.5 crore and adjusted PAT margin stood at 16.4%. Business-wise, Cash Logistics business has grown by steady 10% year-on-year to INR 387 crores in Q1 with an EBIT growth of 6% to INR 99 crores. Our MS & Tech Solutions business revenue grew strong at 31% year-on-year to INR 239 crores. The EBIT in this segment has grown 20% year-on-year to INR 41 crores, and the EBIT margin stood at 17%. The execution of order book, which we won last year is on track, and we estimate majority of these go live in next six months.

With this, I would like to hand over to Rajiv for his closing remarks.

[Rajiv Kaul, executive]

As we've reiterated before, our growth of our company is linked to three macro things. The first is formalization, where we are seeing positive trends which are leading to a strong growth in our retail business. The second was around consumption. Consumption was [indiscernible] during Q1, which seems to be a cross-sector theme, but we expect it to improve in Q2 and Q3 with the festive season.

And third, which is more near term and directly impacts us around the BFSI and banking outsourcing theme. I think the successful IoT [AI/ML] win demonstrates the opportunities which exist for companies like us in integrated outsourcing projects.

If you look back at last year, a majority of the projects for the 40,000 to 50,000 ATMs, which are awarded, they should get executed by the ecosystem in the industry in the remainder of FY '25. There also has been a fair amount of discussion on the ATM interchange for both bank on ATMs as well as white label ATMs, and we await a positive quality decision in the coming months. Some of the large bank RFPs or BLA ATMs, which hadn't concluded successfully because the discovered price was higher than interchange. I think we'll get an impetus and hopefully, we'll move forward to closure if the interchange increases.

And if this interchange increase happens, I think that will give the impetus to the ATM growth and also drive higher outsourcing in that channel. To summarize at the close, we are reasonably confident of achieving our FY '25 revenue guidance of INR 2,600 crores to INR 2,800 crores, which would translate to a growth of 15% to 19% for the year. Q1 at 17% is in line with the middle of this growth. Thank you, and we can move to questions.

[Operator]

[Operator Instructions] The first question is from the line of Divyanshu Mahawar from Dalal & Broacha Stock Broking Private Limited.

[Divyanshu Mahawar, analyst]

And I wanted just to know about in last FY '24 annual report, if you look at, I mean, cash flow there is some element called as bad debt and provisional for bad debts also. It is amounting over INR 90 crores and last year was something called INR 98 crores. So how do you look this and what actually tells us? Because every year, we are looking at this amount is around INR 80 crores to INR 90 crores. We are writing off. So what not going forward it should reduce or it should be same as it has been?

[Rajiv Kaul, executive]

So just before we answer the specific question, this is Rajiv. I just want to -- we did a fairly exhaustive FY '24 end-of-year call exactly two months ago where we had a detailed presentation, lots of Q&A. For anyone who's new to these calls, I would sincerely request you to please go through the Q&A. It will help solve, answer a lot of questions. Nothing dramatically has changed in our answers or like in the last two months. Coming especially to the risk cost in the provision, I think we have guided -- I mean, whatever guidance we have said, I think we have said that this number was roughly 5.1% in FY '23. And we said that this should be around the 4%, 4.5% in FY '24.

I would -- this is a number which you can't forecast with any accuracy in the future. Therefore, we hope to work hard to make sure that our provisions remain in that range in the coming years.

[Divyanshu Mahawar, analyst]

So is it right to assume that the implementation of cassette swap will reduce this provisioning?

[Rajiv Kaul, executive]

Look at our business, this is fairly complex. Cassette swap doesn't reset 100% of our revenue, right? There are many service lines. In the revenue lines where we are linked to ATMs and cash flows, cassette swap will lead to reductions. We have seen the reductions actually if you see the trend line for FY '23, '24, we already seen a reduction. Will this number be zero? No, never.

[Divyanshu Mahawar, analyst]

And sir, last question is that can you give us an update on the pull-in management that we are coming -- so what is an update on that? Is it we are going to launch in this year or what -- any sort of update?

[Rajiv Kaul, executive]

I would recommend you to listen to our FY '24 end of the year call. I think we have talked about the fact that incubation and we look to grow it. It's a very small business right now. We are incubating it internally. If there is anything here which changes from a growth strategy or M&A, we will come and update you.

[Operator]

[Operator Instructions] The next question is from the line of Nehal Shah from Pruden Broking.

[Unknown Analyst]

Am I audible?

[Rajiv Kaul, executive]

Yes, we can hear you.

[Unknown Analyst]

My question was about the margins in Managed Services. So it has come down from around 18.6% to 17.1%. For cash management business, I can understand that this year, the active -- this quarter, the activities were low because of elections and also there the economies of scale would not have been paid out. But what was the reason for lower margins in Managed Services?

[Pankaj Khandelwal, executive]

So even the EBIT growth of the MS business is around 20%. As you might be aware that we are relatively new intent in our Managed Services business, which we have mostly incubated internally and is scaled to INR 800 crores in FY '24. This is a large TAM, and we'll try to balance growth and margin. The change in the business mix can impact the quarterly margin, but we continue to deliver higher margins in our overall PAT is around 16.4%, which is a world class, and we continue to have a ROCE, which is 25% plus.

[Unknown Analyst]

And another question was regarding the mix in revenue of Managed Services, as I guess, reached our target of around 35%, 40%. So will it go to 50-50 till FY '27 or we think it will be stable at this 60-40 kind of a juncture?

[Rajiv Kaul, executive]

It's impossible to forecast this right now. I think we don't know FY '27 year. We haven't given any guidance on FY '27. We have given FY '25 guidance on our revenue range and also the mix. We had expected to reach 40% revenue contribution from MS & Tech by FY '25. FY '24 end, we are at 39%. We think we'll be at the 40% range now, plus or minus 2%, 3%, very difficult to forecast right now. But FY '27 it's too early, we won't be able to give an idea on that.

[Unknown Analyst]

And so the AIoT business there, we won order of around INR 200 crores. Is that understanding correct?

[Rajiv Kaul, executive]

So we said our overall order wins in the MS & Tech business are INR 200 crores.

[Operator]

[Operator Instructions] The next question is from the line of Ankit Kanodia from Smart Sync Services.

[Ankit Kanodia, analyst]

Congratulations on a good set of numbers despite the really weak quarter. So my question is basically related to -- so we see that the growth is clearly visible in the Managed Services and Tech Solutions, and we have ramped up the sales there significantly over the last few quarters and maybe a couple of years as well. But when I talk about Cash Logistics and winning cash logistics if I only talk about retail cash management. I would be really happy if you can share more details as to how do we see us going through in this particular domain? And what is the competitive intensity here from a 2, 3-year, 5-year perspective, how do we see our ourselves in this business? That would be very helpful, sir.

[Anush Raghavan, executive]

Ankit, I am Anush here. I think as we've shared in some of our details already, I think our overall growth profile in the retail continues to be -- is very strong. We have some good tailwind and momentum there. A lot of that has come on the back of investing significantly in technology and creating a very strong sales team to focus on expanding the overall market. I think as we alluded to in our previous call as well, out business point additions last year, a majority of them were from retail cash management business. And I think we continue on that, right?

When you see our first quarter, we've added 3,000 business points. So in terms of where that business is growing and how the growth prospects are, they continue to be very strong. I can't speak too much about the competitive intensity because I think what we are trying to do and create here is a very different and a unique and a different approach. Creating an ecosystem and partnerships ranging across fintech payment banks. And like I said, we are sort of trying to broaden and create a much larger market opportunity than what exists today.

[Rajiv Kaul, executive]

Market where we have been -- CMS has been a filer in the retail side of the market long ago. And I think we are driving fairly aggressive growth and market share focus in the business. But what is important is that this market growth, we see a lot of momentum in the market in formalization, as I talked about. The retail sector seems to be overall buoyant in terms of investment to expand a number of outlets and stores. We are looking for a lot of -- looking to see how we can expand the overall market size instead of competing in the market we've been competing in.

[Ankit Kanodia, analyst]

Just a follow-up on this, sir. If my understanding is correct, all the retail bench points, we are generally covering it through our partnership banks and NBFC, right? But do we also have any plans on taking to this market directly to our end consumers and not going through just banks and NBFC. Do we have anything on those plans?

[Anush Raghavan, executive]

Yes. I think without getting too technical into the operational aspects, I think what I mean to say, when we are talking about partnerships is -- so end of the day, we are a cash management company and a technology service provider. We are not a payments company ourselves, and we can't be doing settlement directly. The way we are looking at growing this market is creating a large sales team and creating a technology with multiple APIs, which can integrate with retail. And the settlement of that will happen through partner banks and partnering NBFCs. But as far as the relationship is concerned, in many cases, we would be sort of fronting and helping expand that.

[Ankit Kanodia, analyst]

Sir, maybe I'll rephrase my question. What I meant was not about settlement, but I was talking about the cash pickups and all those activities. Right now, all these activities are done through our contracts with banks and BNFCs.

[Rajiv Kaul, executive]

No, all of them are not through banks. No, they're not all done through banks. Some of them are direct, some of them are through banks, I think the proportion will change over time, depending on -- again, I think what we try to deliver is the solution set through depending on the retailers' needs. Banks would always be involved as a sort of a payment mechanical or for a settler. I don't think there is a -- but the sales effort has changed over the last 1.5 years, to directly be able to understand customer needs at the individual retail company level and then to customize a solution, which also includes the cash pickup service, right?

There are other things which we believe which we work on. I would -- sure you would have looked at our presentation at the end of Q4. I think Anush had explained this in detail. Beyond that, I think, will not be right from a competitive perspective.

[Operator]

The next question is from the line of [ Yash Nerurkar ] from Edelweiss Mutual Fund.

[Unknown Analyst]

So just wanted to understand basically, you started off with not throw any touch points with the bank. And now you're seeing an opportunity on the retail side as well and as we continue the build some other things, as you mentioned earlier. So I just wanted to understand from a profitability perspective, how do you measure -- because it's based on a trip, like a round trip. So from a round-trip just have to mention that profitability, et cetera, retail side and a bank rate. So how different would they be? And what are the different metrics that you evaluate that?

[Rajiv Kaul, executive]

I think we may not have engaged so much earlier with you, but just our routes are fungible, right? Our routes are fungible for an activity. It could be an ATM loading activity or it could be a retail cash pickup or it could be something else. So I think it's very difficult to figure out profitability by each individual line item. But again, by part, the businesses which have been established over a long period of time will have higher profitability in your businesses where we are driving high growth and high market share will be lesser profitable.

[Unknown Analyst]

Okay. Okay. And my second question was about earlier you had mentioned that you'll be partnering with new bank and you'll be adding a few more touch points. So how is that project coming along? And are there any new banks which have partnered with us? And it's okay if you don't name them, but just wanted to know the incremental logos that you have won.

[Rajiv Kaul, executive]

Sure. I think, again, we've shared a lot more data and details on this in our annual update, and we'll continue to do that in that cadence. But we've been in this business for 25 years. I think what we work with almost every single bank in the country. I think when you're talking about partnerships and expansion this is more about trying to expand the solution set. What used to be a [ Plain Vanilla ] logistics service of cash pickup, I think we are sort of significantly seeing a transformation. As we work closer with retail and we engage directly with that I think we understand far better the needs, especially through technology and automation where we can bring in greater efficiency, better controls and better risk management.

All of that CMS cannot be doing alone. We have a role to play as acting as an integrator in this space. But there's also value that fintech or payment banks can do in terms of bringing their capabilities and their concepts. And I think that's the partition that we looking at. I think as we alluded to last time, we have more than 35 to 40 different logos and retailers through we are working directly as we speak.

[Unknown Analyst]

So this includes bank as well as retail?

[Rajiv Kaul, executive]

Yes.

[Operator]

[Operator Instructions] Next question is from the line of Abishek Singhal from Naredi Investor.

[Unknown Analyst]

Sir, my first question was how much cash loss due to [indiscernible] recover from insurance company in Q1 FY '25 and FY '24 and how much time do you have to recover money from the insurance [indiscernible] This is my first question.

[Rajiv Kaul, executive]

Do you want to finish all your questions, and we can answer them?

[Unknown Analyst]

Yes. Second question, how much bad debt write-off in Q1 FY '25? That's all.

[Rajiv Kaul, executive]

I mean so I don't think we have any data on Q1 basis. These are numbers that are reconciled end of the year. We have given a half yearly -- sorry, half year and full year. That's the number where we are able to provide you on bad debt provisioning, losses and all that information. From the perspective of insurance, I think that's a very -- I don't think there's any track record. We can tell you how long does it take, it's a case to case specific.

We've been in this business for 20 years. I think it's a part and parcel of our business to be able to get a right insurance, policy cover for our risk. And in case there are any bad instances happen, recover the money either from working with the police and investigation authorities or with insurance. And all the exact details are part of our annual report. I think that's if you read that annual report, you will have all the detailed information for the full year '24.

[Unknown Analyst]

And sir, I missed that number, what is your risk cost for FY '24?

[Rajiv Kaul, executive]

Which cost?

[Unknown Analyst]

Risk cost.

[Rajiv Kaul, executive]

Roughly about 4%.

[Operator]

Next question is from the line of Franklin Moraes from Equentis Wealth Advisory.

[Franklin Moraes, analyst]

So firstly, we have adjusted PAT margins of about 16.5%. So are we likely to maintain the PAT margins at these levels?

[Rajiv Kaul, executive]

We have never given a margin guidance. I think our only guidance since we have listed has been on revenue and revenue targets. Very difficult to guess what PAT margins and costs will be in the coming years.

[Franklin Moraes, analyst]

Okay. Okay. Sir, in terms of our ESOP cost, I believe you are at INR 10 crore, and you did mention that this -- in the last quarter, you did mention that maybe there would be another quarter where in our ESOP cost would print at these levels, and then it would decline to INR 8 crores or INR 6 crores, INR 4 crores and so on. So any change in that trajectory?

[Rajiv Kaul, executive]

Not as of now.

[Franklin Moraes, analyst]

Okay. Okay. And in terms of our FY '27, like the last time we had given FY '25 that is because merchant [ advise ]. So when can we expect in FY '27 guidance from you?

[Rajiv Kaul, executive]

As soon as we feel reasonably confident of the guidance we will come back to you. But I would say, in the second half of the year or the end of '25, we will do our FY '27 guidance. But we will look at it at the end of the first half and see if there is any material change. Otherwise, I think end of FY '25, we would be in a better position to do that.

[Franklin Moraes, analyst]

Okay. And lastly, are we now -- will this current mix of Managed Services, the revenue mix be stable now or going forward?

[Rajiv Kaul, executive]

I mean, are you saying will it remain 40 or go down or go up? I'm not sure. All right. If you think of the -- if you see the trend over the last two, three years of us reporting numbers publicly, the Managed Services business is overall growing at a far higher rate than our Cash Logistics business. So I would expect the mix to keep changing steadily. Then it was 70-30, 65-35, it's at 61-39. I think we'll get to 60-40. And already, we are there and I think this will certainly keep changing. I don't think it will be at a 60-40 is my sense. Of course, this doesn't assume right now anything to do with any new businesses if we either launch them or we end up acquiring any business, that will obviously have an impact on the mix and proportion of these businesses.

[Operator]

The next question is from the line of [ Hershdeep ] from [ Kuber ] Investments.

[Unknown Analyst]

My question is that as the [indiscernible] role. Are you considering changing the name of the organization to better reflect this business?

[Rajiv Kaul, executive]

Well, we take your feedback and advice seriously. We will -- we have evaluated this at different parts of our journey as a company. It is something which is something we are thinking about and working on to reflect better -- I mean, in terms of overall brand, but it doesn't mean a name change or a position change, I don't -- I can't tell you, it will be premature. But our team is working on how do we communicate better about the type of company we are evolving into. So your question and feedback is appreciated.

[Operator]

The next question is from the line of Neel from ValueQuest.

[Neel Shah, analyst]

Yes. So I just have one question. I wanted to understand how the company is thinking in terms of BLA going forward. So for the next one or few years product sales are in terms of absolute number? I mean, how will that directionally change for us part of '25 and '26?

[Rajiv Kaul, executive]

So I'll try and just -- it's a good question, and let me just use this opportunity to summarize what we have said at all stages. The BLA business is -- it's named BLA, but has various sub components. We currently do roughly 5,000 ATMs in our BLA business, which will be a market share in India around 5%. We do think that over the coming years, a lot of banks, when they outsource and revamp their ATMs, they will move to the BLA model. We will bid for those, wherever we are feeling confident of the return profile. I think we've had a fairly decent return profile, and we'll focus on that.

Increasingly, we are also seeing some banks move to a fixed priced model in terms of a transaction linked price. If in the change increases, depending competitor intensity, I think we are generally very cautious around any capital-intensive businesses. We've also stated that as a policy, we have given a direction that we will cap our BLA oriented businesses at 15% of our overall revenue. I think today, I don't exactly know if I can't remember outside FY '24 but our overall BLA business would be 30%-ish or something of our overall revenue. Out of which a reasonable part, I mean I think 30% or so 25%, 30% is likely to be linked to a fixed price model, which has got a more steady return profile.

That's the variability, which is linked to the -- which is a assumed with the transaction in BLA. [indiscernible] do we expect to add really, it depends on if we are able to win a good quality contract. We would happy to add. If we don't, we don't, like last year, I don't think we incrementally added many ATMs in the BLA estate at all. But I would think that we -- in our mind think about other 1,000, 2,000 ATMs addition in BLA on the transaction-linked model. But this is a fixed price where there's a fix -- we know the price is sort of fixed and will not change and get linked to usage, I think we count that very differently.

[Neel Shah, analyst]

But if I just look at the absolute sales of product in FY '24 [ INR 75 crores ], right? So now going forward, should we expect this product sales to be product grow to be faster than our company level growth?

[Rajiv Kaul, executive]

It is impossible to predict product sales linked to RFPs, RFPs keep getting up and down, pulled up and down, competitive intensity, sale of products is not a pure play product only. There is linked to also some services come with it. I think it is good for us if we are able to maintain a good product win rate because it leads to downstream services revenue for the remainder part of the project. We've had some good wins last year which are getting into year-end this year. But I think, again, if I take this opportunity to remind people because some of you are new to us, right from IPO time, we have been telling -- we've been trying to -- it's not a guidance. We're trying to get set expectations saying that what you call product is something that are 5% or 10% of annual revenue is usually what we try to keep it at. I mean it's not something -- we'll not stop at it even more. But I think if I look at the longer-term trend, there will be some bad years, some excellent years, but 5% revenue is usually where this is at.

[Franklin Moraes, analyst]

And just one clarification. You mentioned that you are going to cap your BLA that business is 15% of revenue, which is about 13% currently. So 13% of managed services or the overall revenue you are talking about?

[Rajiv Kaul, executive]

The overall company revenue.

[Operator]

The next question is from the line of Aasim from DAM Capital.

[Aasim Bharde, analyst]

Just one question on the BLA bit. So like you said, banks are moving to a fixed price model versus variable. I'm just curious to know what exactly is changing that the banks are doing this. Is it the bargaining power -- is bargaining power coming to the BLA operators given capital deployment requirements or maybe the industry is consolidating or do banks anticipate higher footfall than ATM going forward and hence moving to a fixed price model.

[Rajiv Kaul, executive]

So we are not a BLA market leader. We are not even the top 3 or 4. We are the wrong people to give you guidance on this. I think there are other larger companies, which will -- which have bread and butter as BLA. Overall, the way we think of it is -- I think different types have different outsourcing strategies than they change, right? The ones which we have seen moving to a fixed price model are looking at it -- think of it as banks. Why did the bank put an ATM? A bank puts an ATM to automate, to reduce the traffic at a branch and also to cut cost. So it's like a mini branch in some ways. And I believe when banks put out branches, they're not looking always at profitability, they are looking at customer service. Similarly, some banks are focused on customer service and customer access. And therefore, they don't necessarily want the vagaries of what a BLA model can do where if things turn bad, then quality of service does logically get impacted.

So I think they want to make sure that they have a far more stable customer experience and therefore -- and they want to have a predictability of the cost, and therefore, they move towards that model. That's what we try and advocate to people that's putting up an ATM is part and parcel of your operating costs. It's not something where you ought to think about making it a profit generating source or something. However, every bank has a different way of looking at it, right? So we can't argue bank strategies. I don't think in any way ever, it's going to be possible that the -- whatever we call the balance of power. I mean, I'm sorry, customers, vendors, [indiscernible] balance of power [indiscernible] with customers, right, it's never with a vendor source. And I don't think anything has changed there at all.

[Aasim Bharde, analyst]

And just a second one then. So most, at least from what I understand, most of the ATM deployments rather the ATMs that are coming in with -- when you are setting up a new branch itself, is there like a decent business case for the ATMs on site to also shift to the ground label ATM model?

[Rajiv Kaul, executive]

So it is already outsourced by a majority of the private sector bank. So your question is multilayer. Does the bank need to own the ATM with a branch? They choose to. I think it makes far more sense for them to own the assets which are sitting on their own branch. Is there any real leverage in outsourcing that to some third party? Not necessarily. I think the ownership, right? There is ownership and then the outsourcing of services, which could include maintaining...

[Operator]

The next question is from the line of Kunal Sharma from SP Capital.

[Kunal Sharma, analyst]

Just wanted to check that in FY '24, we had a CapEx of nearly INR 99 crores, right? So are we going to maintain INR 200-odd crores that we - as you highlighted in the previous call as well for the FY '25?

[Operator]

Ladies and gentlemen, the line for the management seems to be disconnected. Please hold while we reconnect.

[Rajiv Kaul, executive]

Can you hear us?

[Operator]

Yes, sir.

[Rajiv Kaul, executive]

So if everybody can hear us so going back to the question, I think the profit of the banks over time should logically outsource the branch on ATMs also there are roughly almost 100,000 such ATMs which turn out also to cash management. How long that takes a factor of time. But I think logically, it's linked to the cost increases and how challenging that becomes to manage the ATMs of period of time.

[Operator]

The next question is from the line of Kunal Sharma from SP Capital.

[Kunal Sharma, analyst]

So just wanted to check that in the previous call, we have guided the CapEx of nearly INR 200-odd crores. So are we going to maintain the same for the FY '25 as well? Because we had INR 99 crores in FY '24.

[Rajiv Kaul, executive]

We have guided to a INR 300 crores for this year. We said we do INR 200 crores average for -- over a block of two, three years because last year's -- profit last year is INR 100 crores. So therefore, this year is likely to be the INR 300 crore range as of now.

[Kunal Sharma, analyst]

For the entire business, right, for the cash and the net?

[Rajiv Kaul, executive]

Yes.

[Kunal Sharma, analyst]

And one more question on the -- in the PPT. I have just seen that for the FY '24 to FY '27 that you have highlighted the new business lines. So is that the same which is AIoT IoT? Or do we have anything else to look forward in the business?

[Rajiv Kaul, executive]

So we currently have seven business lines. Some of them are entirely new. So hopefully, they will expand and grow at a fast pace. We've also, last year, I have talked about the same presentation or the earlier presentation talked about incubating a couple of new businesses around collection services and solutions and also around billion logistics. So we -- so that's, I think, what we referred to from -- in that slide which you're referring to right now.

[Kunal Sharma, analyst]

And last one more thing. As far as the CapEx -- sorry, the order book is concerned, roughly we have nearly including quarter 1 order book. So we have roughly plus INR 2,000-odd crore order book, right?

[Rajiv Kaul, executive]

Yes.

[Kunal Sharma, analyst]

And that will be reflect in the second half of FY '25?

[Rajiv Kaul, executive]

So the order book, which we won in FY '24, these projects are all technology-oriented projects, they have their own cycle of getting tested, approved, piloted and then going live. As Pankaj I think talked about, the fact that the majority of the orders we won in last year should go live in the next two quarters, majority. Won't be 100% next but majority of them should go live in the next two quarters. Therefore, the revenue will start improving after that.

[Operator]

The next question is from the line of Ramay Jain from Deal Wella.

[Unknown Analyst]

My question is on the retail cash solution that we are looking to launch this year. So just wanted to understand the progress on that front and what estimates do we have from this business contribution over the next couple of years?

[Anush Raghavan, executive]

I think just to clarify, our retail cash management is a business that we've been running for since the inception of the company and when we talk about retail cash, it's in the context of that, where I think we're seeing some very strong tailwinds and growth. The business which we've incubated and launched newly is the retail loan collection part of it where we're helping banks with the debt management and loan collection services. And I think we have spoken a fair bit about it in our annual call not much to update from there to now. I think we will look at incrementally different acquisitive opportunities in this space. And when we have something to report, we'll come back to you.

[Unknown Analyst]

Okay. And also with the new CIA on hand, what would be the clear focus areas and mandate at that end in order to add alpha to growth? Because I'm sure this has been brought in timely for the new solutions that we have been incubating and now we want to take them at scale, so wanted to understand this over the next 2, 3 years. For example, if you are going to grow at 15%, 17%, and these new solutions start kicking in materially, if not significantly, we could easily achieve 20%, if you think that is a reasonable estimate. So from INR 2,600, INR 2,700 this year, we could be at INR 4,600 in the next three years. And this is organically. I'm not factoring in any acquisition as yet. So I wanted to understand this bit.

[Rajiv Kaul, executive]

I want to smoke, whatever you're smoking. I don't think you should be thinking businesses can grow 20% in a row for five, six years. I would love to be in those businesses and make profit margins like we are. I think I will -- I like your commentary. I think I will use your set targets internally now. But I think we will stick to what we have said. We have -- from FY '21 to '25, we have given a growth guidance of -- growing at roughly 17%, 18% growth revenue. As we get to our number of FY '25, we will come back with FY '27 and maybe in FY '30 number of revenue.

We, of course, look to deliver alpha, but we are alpha what, right? We are in many businesses and many sectors. So I think we overall look at delivering a good double-digit growth. We have done that for the last four, five years. We hope to do it in the coming years.

[Unknown Analyst]

Okay. And what kind of business point edition and compliance network can we expect? I mean, because earlier you indicated that it should be 90% or even plus. So where do we stand? And how do we see this moving ahead this year?

[Anush Raghavan, executive]

Yes. I think I mean not much change in the last since we -- last two months back in May and now not a change. Like we told you last time, I think 85% of the ATMs are compliant. And I think that process is now more incremental and organic. Our network is almost fully compliant. So any new business point gets added into it sort of comes along with that [indiscernible] .

[Unknown Analyst]

And lastly, since we have a decent idea of how the funnel of outsourcing is moving. Is there any incremental visibility on what could be the new business wins, I mean do we have a better understanding, a better likelihood? Or does it remain similar to the last commentary that you shared?

[Rajiv Kaul, executive]

Sorry, we didn't really understand your question. But I think what we remember what we have said about is that there are about RFPs on the ATM business are roughly about totaling 20,000 ATMs. Those RFPs are expected in this year to launch and hopefully get concluded. As they close and depending on what sort of -- depending on the terms of the RFP, we will obviously try and bid for what makes sense to us, and we'll update you end of the year of what the results have been.

[Unknown Analyst]

And about the INR 300 crore CapEx. Could you give us a sense of how this is going to be spread out, I mean, across our income structure such as Vans or on the ATM side or on other businesses that we are incubating or R&D or something like that, that would really help.

[Rajiv Kaul, executive]

I mean we don't have an exact split of this by all of these things, but I think the -- a large part of the CapEx is going to go into executing our new wins, including the technology wins. We have front-loaded a significant part of CapEx for our infrastructure revamp in the last three years. I think for the next couple of years, I think the CapEx spend will be more linked -- majority of that, not all will be linked to some of the new wins. And then obviously, whatever we need to invest from a technology perspective.

[Unknown Analyst]

So predominantly, it's going to be on the business infrastructure you hand?

[Rajiv Kaul, executive]

Yes. I think a large part of this CapEx will be growth CapEx and the very little -- lesser portion would be on maintenance.

[Unknown Analyst]

And lastly, are we able to come closer to any identified opportunities to bolt on growth?

[Rajiv Kaul, executive]

You know the norm as soon as we are close to anything, we will have to disclose it, and we will disclose those.

[Operator]

Ladies and gentlemen, that was the last question for the day. I now hand the conference over to Mr. Rajiv Kaul for closing comments.

[Rajiv Kaul, executive]

Well, thank you for your questions. I would, again, thank you for joining this call. Good starting quarter. We focus on FY '25 number, which is luck, and we'll talk to you in more detail at the end of H1 and our October cycle. Thank you so much.

[Operator]

On behalf of Novama Wealth Management, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.