TSI India Data

Here’s a bit of research on VOR. It was a wasted effort for me but it may be of value to others.

At the end of FY 2019 VOR had net assets of $16m. There are three components $11m in goodwill, $10m for TSI India, a little cash, less a $6.5m liability for the cloudten purchase. At a share price of 0.9c the market cap is $25m implying constrained optimism given that 2019 net assets value is 0.67c and tangible asset value is much lower but can be much much lower depending on TSI valuation.

Both acquired business are small service businesses with little prospect of material synergies and their lack of uniqueness means they operate in competitive markets. This is not to say that the technical knowhow acquired does not have value just that the businesses are talent dependant and the value of the knowhow continually declines with education. The acquired brands are not particularly strong when acquired and the VOR quarterly reports evidence top line growth at the expense of margin with assumption adjusted margins falling from about 38% to 23% since June 2019.

From HotCopper threads the VOR investment in TSI India seems to be a little mysterious. Here is my summary of its financials converted into AUD $m at current INRAUD=50.



These figures shows the low margins associated with a high level of competition. At the end of September 2019 there were about 200,000 ATMs operated by/for 54 banks. There were about 800m transactions for the month. The TSI India web site claims 550m transactions, presumably annually. With this, the estimated TSI India market share is 5.7%. On average this could be serviced by 11k7 machines. From memory I read somewhere that TSI India has about 14k machines which, if true, would imply lower traffic ATM sites.

The step change in revenue/costs in 2017 is notable. Without further research, my presumption is that was a new deal struck to cater for demonetarisation which occurred around that time.

Over the last few years operations have been funded by selling down investments then increasing borrowings. The debt finance for the 7000 RBI required replacement machines is expected to increase debt by say $7m with fixed asset write offs expected as the replacement program progresses.

Good luck all