IPO-bound CMS Info Systems looks to ride on banks’ ATM refresh and upgrade cycle

CMS Information Programs, a number one money administration providers supplier, expects to trip on the ATM infrastructure enlargement that banks are prone to embark upon within the subsequent few years after latest stagnation, its Vice-Chairman and CEO Rajiv Kaul has mentioned.

“We see a big alternative in public sector banks’ refresh and improve cycle which in subsequent two years will yield lot of orders (for ATM and money administration providers) getting handed. The worth of contracts can be getting giant,” Kaul informed BusinessLine.

Additionally learn: CMS Information Programs’ IPO to open on December 21

CMS Information Programs, which can hit capital market with a ₹1,100 crore preliminary public providing (IPO) on December 21, is already having an order guide of about ₹2,000 crore and expects banks to do much more outsourcing within the subsequent few years as they get extra environment friendly in each side of their value construction.

Kaul mentioned that at present banks are increasing and refreshing their infrastructure they usually have aggressive plans. “Bigger banks will drive this enlargement, their base is excessive and buyer segments are broader. Alternative can be incredible now for us due to the consolidation that banking system has seen. It was a more durable alternative earlier as there have been almost twenty plus banks. Now, we have to cope with solely 9 banks after consolidation,” he mentioned.

Popping out of capex stagnation

Banks are popping out of an prolonged capex stagnation and credit score down cycle over the past 5 years on account of excessive non-performing belongings, demonetisation, items and providers tax implementation and consolidation among the many public sector banks.

The upcycle is predicted to drive enlargement into semi city and rural (SURU) areas, which are literally underneath penetrated at 15 ATMs per 1 lakh people of 2020. The ATM penetration charge in India is about 22 ATMs per 1 lakh people at an total stage. The worldwide common for ATM penetration stands at 47 ATMs per 1 lakh people.

In distinction, the penetration charge for US, Brazil, China and Mexico is 123, 103, 95 and 62, respectively, per 1 lakh people as of 2020.

The variety of ATMs in India grew at a compounded annual development charge ( CAGR) of 20 per cent between fiscal yr 2011 and financial yr 2016, however the improve between fiscal yr 2016 and financial yr 2021 slowed right down to a 3 per cent CAGR ( reaching 255000 ATMs). The variety of ATMs in India is predicted to extend from 255,000 as of March 31,2021 to 365,000 as of March 31, 2027, representing a CAGR of 6.16 per cent.

“In 2014-16, there was lot of contracts that got here in for increasing the ATM channel. Then you definitely hit a brake similar to demonetisation, GST and public sector financial institution’s NPA disaster. Public sector banks needed to cope with mergers and NPA disaster. Now banks have simply began popping out,” Kaul mentioned.

Regardless of the yr of Covid-19, when most of different industries couldn’t function totally, many giant public sector banks have come out with Requests for Proposals (RFPs) for ATMs partly to improve their finish of life ATMs and partly to broaden their community, he added.

“I firmly consider that the ATM alternative is large, the ATM base in India will develop However I don’t assume it’ll hit double digit development,” Kaul mentioned.