FINDI (FND) Indian ATM and Fintech business

[Rawz]

I wanted to buy if it broke the last $1.30 high but was too slow to move and when it hit $1.60 i thought bugger it ill just let what i have ride.

However I pondered for a couple of hours yesterday arvo and thought na its still way undervalued so bought up fairly big (for me) at $1.50 when it pulled back.

My thinking was around the downside risk and losing money on the $1.50 buy and went something like this:
- Strong balance sheet thanks to the options being exercised
- Directors all put in substantial money by exercising their options and now have big skin in the game via substantial (5%+) holdings
- The major ATM contracts go out to 2029 and 2031 so income is secure for the medium term

So I was like na the downside risk is small so its okay to have a decent punt here and top up.

Then of course the upside potential is very strong as any day now the white label license could be announced or new ATM contract could be announced or the run rate of new merchants added to the FINDI-pay platform increases..
Then there is the whole booming Indian economy thing and FINDI is one of the only ASX listed pure plays in that market. So as word gets out and the market cap gets up over $100m more funds will be keen/able to buy in.

And lastly this is why I post that update valuation last night above just to clarify in my mind that $1.50 was not crazy stupid buying.

[Joshuatree]

All good but alot of expectation of white license approval may be built into the price rise.Its not a 100% sure bet the licence will be granted? Or it will be but timeframe my be longer*?

[Rawz]

All good but alot of expectation of white license approval may be built into the price rise.Its not a 100% sure bet the licence will be granted? Or it will be but timeframe my be longer*?

Its possible. I'm leaning towards the side that white label is purely upside. I.e. the FY24 guidance provided is just based on current contracts. And based on FY24 guidance its cheap.
Any white label ATM rollout would fall into FY25 and beyond anyway.

Announcement just out now:

https://stocknessmonster.com/announc....asx-3A635352/

Findi Chairman Mr Nicholas Smedley commented: “The option conversion was strongly supported by existing shareholders and is a clear endorsement of Findi’s strategy and the results being delivered by the Board and Management Team.

“These funds, together with the funds raised from the Piramal Alternatives placement in November 2023, ensure that Findi is well capitalised and provides flexibility with respect to pursuing growth and scale through accretive acquisitions, the expansion of the FindiPay footprint and product offering and the roll-out of white label ATMs.

“Our application for a white label ATM licence remains before the Reserve Bank of India and we remain confident that the licence will be granted in the near term.”Findi has expanded rapidly in India during the past 12 months, including an acceleration ofgrowth in its merchant footprint, GTV and ATM network.

[Sideshow Bob]

Good rationale to work through your equation again.

Also, I can't see anywhere where you've allowed for the $10.7m raised - which equates to just shy of 22c per share.

142k through in the first 10 minutes this morning......

[Muse]

Nice work rawz - you LEGEND!

[Rawz]

Intraday $1.41 - $1.60. lol wow.
where it lands at close I have no idea...

[Rawz]

Good rationale to work through your equation again.

Also, I can't see anywhere where you've allowed for the $10.7m raised - which equates to just shy of 22c per share.

142k through in the first 10 minutes this morning......

The $10m raised also issued a bunch of new shares so it essentially already gets accounted for.

I think overall the company will still have net debt right now. Only a small amount. However by end of financial year that may swing to net cash since they are going to generate $20m op cashflow in this year as per guidance.
(FCF was $12.4m at half year)

But then they have flagged on multiple occasions acquisitions in the ATM space so they intend to use the balance sheet strength which means going back into net debt.

[Rawz]

Well with the benefit of hindsight the $1.50 big top up was a good call. But i did the work and thinking and ran though the process... so im not surprised but still, i am very happy with myself

MST Access has initiated coverage and OMG THEY HAVE SET THEIR VALUATION AT $4.31/SHARE


https://www.mstaccess.com.au/company/findi-limited you may need to create an account. Its free.

NEED TO KNOW
− Listed exposure to growing Indian fintech market
− Large ATM footprint generating significant cashflow for returns and reinvestment in digital banking services
− New funding shows potential valuation read through

Direct exposure to a global emerging market:
Findi is the only Australian listed company that provides direct access to the emerging Indian fintech market, which services 1.4 bn people (~25% remain unbanked) and remains heavily dependent on cash transactions. Findi’s strong ATM network is highly cash generative and supports its digital services growth, diversifying the business.

Key partnerships with major market players:
Findi’s 20.5k ATM network isunderpinned by two highly significant agreements – with the State Bank of India and the Central Bank of India. 80% of Findi’s revenue base is contracted, withthe average contract length almost 5 years, aiding earnings certainty.

Recent funding agreement:
Findi’s 100% owned Indian subsidiary, TSI India, raised A$37.6m via Compulsory Convertible Debentures (CCDs) from leading Indian investment group, Piramal Alternatives (owned by Canada’s largest pension fund, CDPQ). Upon an expected TSI IPO, the CCDs will convert to ~16.7% of equity, implying a total market cap for TSI India of ~A$225m.

Investment Thesis

Only Australian-listed way to gain access to Indian fintech market:
As one of the world’s largest non-bank ATM operators in a very large market, Findi services >2.7m customers daily in India across >30k locations, involving both ATMs and merchants. We expect this footprint to continue growing alongside population growth (from 1.4 bn currently), a reduction in the unbanked population (estimated at ~25% presently) and further adoption of digital payments by anincreasingly digitally literate younger generation, even while cash remains king.

Leveraging ATM stronghold to cross sell digital services:
Findi is uniquely positioned as an end-to-end provider (the only fintech provider that provides both ATMs and digital services) that can leverage its basic cash services, as a cheap customer acquisition channel, to further develop into a full-service digital banking provider. Both business segments provide significant diversification benefits.

Current earnings multiple highlights value on offer:
Recent management guidance was reaffirmed in the 1H24 result announced in November 2023(reported revenues of $31.8m and EBITDA of $12.6m). Applying a conservative market multiple of 10.5x to our FY24 EBITDA forecast results in a valuationsignificantly higher than the current share price.

Valuation

Findi’s earnings outlook underpins our valuation. We derive a valuation based on a 10-year DCF and market EBITDA multiples basis (equally weighted). Our valuation of $4.31/share is supported by our view that growth in Findi’s ATM network and services will support revenue and profitability.

[percy]

https://cdn-api.markitdigital.com/ap...68254-3A635606

The company may not know why the share price increased.
We here all know it was because of Rawz's posts.

[Rawz]

https://cdn-api.markitdigital.com/ap...68254-3A635606

The company may not know why the share price increased.
We here all know it was because of Rawz's posts.

If you read enough posts from someone who is often ‘well positioned’ you will eventually get one right and be ‘well positioned’ yourself