FINDI (FND) Indian ATM and Fintech business

[Rawz]

Me too Bob and sb9. Had $14k in my sharesies account looking for a home and when the SP dropped below $3.40 i was going to put it in for some more shares but didnt for whatever reason.

MST access has put a new valuation of $5.43. You can access the free research here: Research Notes - MST Access you just need to create a login.

FY24 result: Revenue of $66.5m (+22% pcp) was largely in line and EBITDAof $27.4m (+63%) was a strong beat against guidance of $24.0m (and vs ourown estimate of $24.9m). We note the result did not include the full impact ofthe CBI contract rollout, which will provide added benefit to FY25.

Balance sheet strength to support digital strategy: the strong resulthighlights the margin and cash flow benefit being achieved as the companyscales its ATM and merchant footprint (now ~49k as last reported), the latterof which is particularly key to Findi's digital strategy. FindiPay is currently only~10% of revenues vs management's longer-term goal of 30%.

Upgrades to earnings outlook drive valuation upgrade: we have bumpedour revenue and EBITDA expectations for FY25, but more meaningfullyincreased our forecasts for FY26 (refer to financial summary), once the fullimpact of the expected White Label ATM license and SBI rollout is realised.We await further FY25 guidance in the coming weeks.

Investment Thesis

Only Australian-listed way to gain access to Indian fintech market: Asone of the world’s largest non-bank ATM operators in a very large market,Findi services >2.7m customers daily in India across >49k locations, involvingboth ATMs and merchants. We expect this footprint to continue growingalongside population growth (from 1.4 bn currently), a reduction in theunbanked population (estimated at ~25% presently) and further adoption ofdigital payments, even while cash remains king.

Leveraging ATM & merchant stronghold to cross sell digital services:Findi is uniquely positioned as an end-to-end provider (the only fintechprovider that provides both ATMs and digital services) that can leverage itsbasic cash services, as a cheap customer acquisition channel, to furtherdevelop into a full-service digital banking provider. Both business segmentsprovide significant diversification benefits across cash and digital.

Current earnings multiple highlights value on offer: Applying aconservative market multiple of 10.5x to our updated FY25 EBITDA forecastof $32.4m results in a valuation significantly higher than the current shareprice.

Valuation

Findi’s earnings outlook underpins our valuation based on a 10-yearDCF and market EBITDA multiple (equally weighted). Our valuation of$5.43/share (up from $4.31) is supported by growth in Findi’s ATM networkand services which should drive revenue and profitability.

Risks

Key risks to our thesis include macroeconomic risk (related to Indianeconomic health), regulatory risk (which govern Findi’s ability to providepayment services), management execution risk and key client risk.

[Rawz]

https://www.youtube.com/watch?v=8xCJDUtrWSE

WORTH A WATCH

[Sideshow Bob]

https://www.youtube.com/watch?v=8xCJDUtrWSE

WORTH A WATCH

Thanks for sharing Rawz. Will give this a watch......

Away again this today......!!

Almost better than the Blues winning the Super Rugby title!!

[Rawz]

Thanks for sharing Rawz. Will give this a watch......

Away again this today......!!

Almost better than the Blues winning the Super Rugby title!!

Lol 20 years without a title is tough to beat..
I prefer the title than the FND gains lol. I can make plenty more money but could be another 20 years of pain watching the blues


That MST access report on FND is also worth a read. Very detailed this time. The analysist(s) went on the trip to India along with our friends at DMX.

From the report:

Valuation of $5.43/Share Implies 50% Upside

Base-case valuation: Discounted cash flow (DCF) and EBITDA multiple weighted equally

We upgrade our valuation for Findi based on a DCF and market-based EBITDA multiples basis (both equally weighted) to $5.43 per share (prev $4.31 per share).

On a standalone basis, our DCF valuation is now $5.50 per share (vs $4.48 prev), over our forecast period out to FY34. Given the long-dated assumptions underlying the DCF, it is useful to bench mark this against a market multiple, hence our decision to weight our DCF and market multiple valuations equally.

Our market multiples–based valuation is $5.36 per share (vs $4.13 prev). We apply a 5-year averageASX300 EBITDA multiple of 10.5x to our FY25 estimate of EBITDA for Findi of $32.4m.

Findi has 48.8m shares on issue and 9.5m total options (exercisable at $0.90 per share and $2.00 per share) with various vesting dates, which we assume will issue giving a fully diluted share count for our valuation of 58.3m shares. The vast majority of options on issue are held by Findi’s directors, providing incentive alignment between both management and performance of the company.

.....

50% of base-case valuation = market comparison using EBITDA multiples

Peer group provides interesting comparison… The peer group that we use for Findi is based on industry background, primary activity and global comparables, particularly those directly involved with financial services in India. We provide summary descriptions of each company in Figure 14 below.

…but we use the market EBITDA multiples as a key valuation input. Direct comparison of Findiwith a peer group (by way of business type, function and size) is difficult, particularly given the various revenue segments and strengths of different peers. There is also limited consensus estimate data forthe next fiscal year, although an average of Infibeam Avenues and CMSInfo Systems for FY24e gives a multiple of 17.4x (see Figure 14 – below).

To overcome the challenge of limited available data and the difficulties associated with direct comparison, we apply a more general market approach by referencing the 5-year average EV/EBITDA multiple for the ASX300 of 10.5x (more conservative than the average peer multiple of 17.4x), which leads to a valuation of $5.36, marginally below our DCF valuation.

We note the multiple we apply above is largely in line with the multiple applied to FY23 EBITDA for the Pirimal Alternatives deal in mid-November, when Findi announced that its Indian subsidiary, TSI India, raised $37.6m via placement of Compulsory Convertible Debentures (CCDs) to Pirimal. These CCDs must be converted to equity when TSI India (Findi’s 100%-owned subsidiary, expected to be rebranded under the Findi name) lists on the Bombay Stock Exchange in the future as planned. The CCDs include an annual coupon payment of 8% and call option to buy back the securities at a committed IRR of 18%. If the call option is not exercised before listing, the CCDs will convert to approximately 16.7%of the company once converted to equity. This implies a total market cap upon IPO for TSI India of~$225m, which provides additional upside compared to the stated pre-IPO market capitalisation of$153m (post money $190.6m) based on an FY23 EV/EBITDA multiple equivalent to ~9x (FY23EBITDA was $16.8m).

[Rawz]

$4.70. New high. I thought we were going to have a pullback but it just keeps nudging higher.

FY25 guidance must be close. They said it would be released in 3 weeks about 5 weeks ago

Hopefully see an acquisition next quarter.

Lots to look forward to

[Sideshow Bob]

Annual report out today - https://cdn-api.markitdigital.com/ap...21602-3A644946

Not that far off $5.......maybe FY25 guidance might push it over the edge (or maybe not)

Its farking nutz anyway!!

Only last week I was trying to top up at $3.50!

[Rawz]

Annual report out today - https://cdn-api.markitdigital.com/ap...21602-3A644946

Not that far off $5.......maybe FY25 guidance might push it over the edge (or maybe not)

Its farking nutz anyway!!

Only last week I was trying to top up at $3.50!

Bob I think by Bombay stock exchange listing time we will be looking at a $10 SP…..

[sb9]

Definitely knocking hard on $5 mark.

[Rawz]

I read this and thought of my FND investment:

Instant success is a curse and a gift. The curse is you think luck is skill. The gift is you know it can be done. Then it’s a race to turn luck into skill before you lose it all.