Earnings Call Transcript - XNSE:RADIANTCMS 2026-11-13

Operator

Ladies and gentlemen, good day and welcome to Radiant Cash Management Q2 FY27 Earnings Conference Call, hosted by Antique Stock Broking Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note, this conference is being recorded. I now hand the conference over to Mr. Raju. Thank you, and over to you, sir.

Speaker 5

Yeah, hi, good morning, and welcome, everyone, to the Q2 FY27 conference call of Radiant Cash Management. Today, we have with us the management team of Radiant Cash, represented by Mr. Colonel David Devsaheim, Chief Managing Director, Mr. Alexander David, Holtime Director. Mr. Venkataraman, CFO, and Mr. Muthuraman, Head Strategy and IR. With this, I hand over the call to the MD, sir, for his opening remarks. Of course, we will have other Q&A sessions. Thank you, and over to you, sir.

David Devithahayam, Other

Thank you very much. Good morning, ladies and gentlemen. Thank you for joining us today for Raytheon's Investor Call. The overall performance for the quarter has been underwhelming. The revenues grew by 7.6% year-on-year, despite flat cash volumes in our lean season. However, a significant increase in manpower costs, triggered by revision in minimum wages and shortage of armed gunmen, and higher van costs resulted in lower profitability for this quarter. The company, along with other peers in the industry, have taken this up with all the clients and have been successful in obtaining price revisions ranging from 12% to 15% across all the clients, as we had mentioned in our last earnings call, the effect of which will be seen from Q3 onwards. We continue to grow our direct clients business, which now accounts for almost 20%. Now, for stand-alone revenues, cash and operations also continue to grow at a healthy pace. We have started deploying AI tools and other technological support for optimization of costs, particularly in manpa-intensive areas such as route management, banking and recon, and billing. We hope to see the full benefits of these measures in the next quarter. Cash volume of rupees 0.41 trillion during the quarter. Over the same period last year, we had the least gross cash losses in this quarter since our listing at just rupees 1 million. We continue to have the lowest cash losses in the industry by a wide margin because of our robust risk management systems. Radiant Valuable Logistics continued its revenue growth and clocked rupees 3 million. For the quarter. However, profitability continues to be a concern. Sorry, that was 30 million for the quarter. However, the profitability continues to be a concern, with break-even period moving further. A new team has been inducted for business development and load-factor improvement, with which the management is confident of achieving profitability by the end of this financial year. Radiant Ace Money, our Fintech subsidiary, clocked a healthy turnaround in revenues and achieved near-EBITDA break-even performance in this quarter. The subsidiary is currently scaling up its Soundbox and QR code deployments with several rural and urban banks and improving its transaction revenues on installed base on POS machines. Mr. Alexander David will provide more details on Radiant Ace Money performance. And future plans. Profitability for the quarter was poor at 3.5% PAT margin and 5.4% ROCE. However, the management is confident that the worst is behind us, and the coming quarters will report much healthier numbers. This confidence stems from the recent price revisions from all our customers, ongoing cost reduction exercises with support of technology, and improved performance of RVL and Radiant Today is funny. I am committed to providing transparent updates on our progress and answering any questions that you may have. I would now request Mr. Alexander David to speak about the performance of Radiant Ace Money, followed by Mr. Venkatraman, the CFO, to speak about the financial performance and KPIs.

Alexander Deby, Other

Thank you, sir. Good morning, everyone. Thanks for joining the Learnings Call. I will be presenting the update on Radiant Ace Money, our fintech subsidiary. Radiant Ace Money has had good growth in revenues during this quarter, aided by healthy orders for soundbox deployment, steady growth in transaction revenues from the existing BC network, and white-labeled solutions to smaller banks and NBFCs. Post the discontinuation of PIDF subsidy in December 2025, the focus of radiant ace money in the last three quarters have been to pivot to more stable transaction revenues and also leverage its network for deployment of soundbox, POS machines, and QR codes. This has helped the subsidiary achieve near-breakeven at EBITDA levels for this quarter. As mentioned in our last analyst call, Radiant Ace Money is in the process of diversifying its revenue base to establishing corporate VC network for banks, providing white-label UPI solutions, and offering its fintech software solutions for smaller banks and NBFCs. Towards this end, we have signed up MOU with two small finance banks, one urban bank, and a few NBFCs. The management is confident of scaling revenues from these clients in the current financial year. Currently, we have a network of close to 20,000 BCs during this quarter. We freshly deployed 21,000 soundboxes and facilitated transaction volume of close to Rs. 200 crores in this quarter. We will continue to provide regular updates on the progress of ACE money to our investors as we scale greater heights in the coming months. I would now request our CFO, Mr. Venkat Raman, to present our financial performance. Thank you.

Venkataraman, CFO

Thank you, Alex. Good morning, everyone. Thanks for joining us on this investor call today. I will present the company's key performance indicators on financial performance for the second quarter ended 30 September 2026. The retail cash management business grew at 6.2% during this quarter over same period last year. Growth was largely driven by BFSI and organized retail with some recovery in growth from e-commerce logistics sector. Petroleum and e-commerce segments witnessed luggage growth in this quarter. In this quarter, we handled 0.41 trillion of cash, a flat performance over same period last year. Direct clients accounted for 19.2% of our revenues for this quarter, up from 18.4% the previous quarter, and 15.7% in the same period last year. We serviced 79,374 points, spread across 15,165 PIN codes, and 9,217 locations during the period ended 30 September 2026. The point coverage is the presence of 5% growth over same period last year. Our gross cash losses for this quarter stood at 1 million. This is the best performance in the industry, a reflection of our strong focus on risk management and ex-servicemen culture in our company. Radiant Valuable Logistics reported revenues of $29.9 million, reporting sequential growth of 35% in Q2 of FY27 over Q1 of FY26 and is well on its way to achieve positive EBITDA in the current financial year. Coming to financial performance, the consolidated revenues for the quarter were 1.12 billion, representing 4.4% growth over the same period last year. Standalone revenue growth was 7.52%. The standalone EBITDA margins for the quarter was 7.62%, as against 15.2% in the same period last year. Key reasons for this margin reduction were short increase in manpower-related costs, mainly employee costs, driver and gunman costs, and service charge expenses towards cash activities, which represent 70% of our total cost. Short increase in minimum wages in a few states and shortage of licensed gunmen in several southern states resulted in higher manpower costs. As mentioned in our last earnings call, the company has taken up the manpower cost increase with all its customers and has been successful in getting price increase in the last quarter. The factor of the same will be reflected in the current and subsequent quarters. The consolidated EBITDA margins for the quarter also correspondingly fell to 6.8% from 13.1% the same period last year, as the subsidiary Radiant T-Spanish performance improved to near break-even levels in this quarter. The working capital management continues to remain excellent, with debtors at about 80 days' revenue in September 26. The balance sheet continues to be healthy, with total cash and cash equivalents at about $1.5 billion of our own funds as on 30th September 2026, including cash used in retail cash management operations. Net debt continues to remain nil. For the remaining contours of FY27, the management expects healthy improvement in profitability on account of core business options. Core business profitability improvements supported by the recent price increase, price hike from the customers, strong cost reduction measures being undertaken by the company, improvement in performance of ESR and Valuable Logistics, and better growth in revenues from core business. The management is actively working towards meeting each of these milestones and confident that the same will reflect in the financial performance in the coming quarters. I now hand over the floor for Kusin and Angel.

Operator

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. I repeat, anyone who wishes to ask a question may press star and 1 on their touchtone telephone. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Amit, an individual investor. Please go ahead. Ladies and gentlemen, anyone who wishes to ask a question may press star and 1 on their touchtone telephone. First question is from the line of Keshav Garg from Counter-Cyclical PMS. Please go ahead.

Keshav Garg, Analyst — Counter-Cyclical PMS

So, if we compare our performance with the industry leader, then I'm unable to understand that how come the industry leader's margins are pretty stable at mid-20s, and whereas if we look at our performance, then our margins from a similar level to the market leader, they have really collapsed to single-digit margins. So, I mean, in the same industry, it's very hard to see that how come two players, there is such a huge divergence from the same starting point.

Mutharaman, Head of Investor Relations

Hi, Keshav. Sorry, we cannot, we do not have sufficient information on computer performance of other segments of their businesses for us to directly comment on. But our costs, as we have explained, the particularly driver gunman costs and the cash executive costs have gone up. Manpower accounts for 70% of our revenues, and that is the main cost that has gone up. And, in fact, along with other peers in the industry, we have presented to the clients, and that is how we have been able to successfully get these price hikes. So, the same complaints were raised by all the peers in the industry, including the competitor that you are referring to.

Keshav Garg, Analyst — Counter-Cyclical PMS

Understood. Now, sir, is it the case that the industry leader is able to get a higher price from the customer for the same service? Or is it that it is exactly at par? What we are getting from, let's say, Bank A and what the industry leader is getting from Bank A for the same deal, is it similar pricing or they enjoy some kind of premium over us?

Mutharaman, Head of Investor Relations

The pricing is more or less fairly similar for a bank across its service providers. So, banks may not have differential pricing. Where there is a direct customer, it's a free competitive market. Anybody can price the way they choose to.

Keshav Garg, Analyst — Counter-Cyclical PMS

Right. So, I mean, if the pricing is same, then the cost structure, because, I mean, ultimately, fuel cost is the same for everybody. The cost of your vehicles is the same for everybody. Even the salaries are the same. So, then, how come there can be such a huge differential?

Mutharaman, Head of Investor Relations

Sorry, I cannot answer that without knowing the comparable performance for the similar industry. For the retail cash management segment, if you can give a comparable, then we can answer. That is not disclosed by any of the peers. So for me to do a line-by-line comparison, I don't know how their cost structure and performance in their other segments are. I understand where you are coming from, but this is a uniform concern that the price hike, manpower cost increase, is a uniform concern that the industry association had taken up with the Indian Bank Association, and that is how we are able to get these price hikes. So, it is a uniform concern across all the players.

Keshav Garg, Analyst — Counter-Cyclical PMS

Now, sir, what kind of price hike in percentage terms on a weighted average basis have we been able to get, and is it the same for all the industry players across?

David Devithahayam, Other

Speak to the bags. We are looking at a price hike, as I mentioned in my initial presentation, of 12% to 15% price hike across the board. In terms of any price cutting, I mean cost cutting that we need to do. It's also a lean quarter. In detail cash management, we are not so much into some of the other segments. Though we haven't carried out an analysis of our peers, now we do that in a very detailed manner, nor is that an issue for discussion here. From this quarter onwards, we will be able to, you know, whatever impact has been there, I think we will be able to rest and improve on it.

Keshav Garg, Analyst — Counter-Cyclical PMS

So everything else being same, since we got around 12-14% price hike, so the 8% standalone margin should become at least 20% in the coming quarter. Is that understanding correct?

Mutharaman, Head of Investor Relations

I won't be able to give an exact number on that because the start dates for different banks are at different points of time, and there are variants in the business. For cash-run operations, it's slightly different rates, and the mechanics work differently. But there will be a definite significant improvement, but I don't want to put a number of 20 or 21, whatever that you are.

David Devithahayam, Other

To add on to what Mr. Muttramanis said, I think the impact can be seen from the fourth quarter onwards. And it will be a definite impact from the fourth quarter. I mean, currently in the third quarter, it's being applied. So, it will have a definite impact in the coming financial year that you will be seeing.

Keshav Garg, Analyst — Counter-Cyclical PMS

Sure. Now, sir, is the fuel cost and is the fuel cost pass-through? Is there any formula-based price?

Mutharaman, Head of Investor Relations

No, there is no pass-through of fuel costs. Okay, understood.

Keshav Garg, Analyst — Counter-Cyclical PMS

Answer the wages that we pay. Are we paying the minimum wage or higher than minimum wage?

Mutharaman, Head of Investor Relations

Okay, the answer depends on the different states. There are certain states where we are able to manage at the minimum wages, particularly north and central states, and southern states is well above minimum wage.

Keshav Garg, Analyst — Counter-Cyclical PMS

Understood, sir. Now, sir, we pay a very healthy dividend, and we have a huge net cash, I believe, above 150 crore on our balance sheet. So, instead of dividend, if we do a share buyback, that will be a huge advantage to the company, because ultimately, the earning per share will increase if the number of shares decrease. Sir, because dividend is a one-time thing. Once the cash goes out of the company, that is the end of it. Whereas, by doing a share buyback with the same amount, the company can reduce the total number of shares, so the earning per share will increase even with the same profitability. Sir, so that would be of permanent advantage. And, sir, the government has recently removed taxation on buybacks, so there is no tax back at all. Sir, so that would be of huge benefit if we can consider that.

David Devithahayam, Other

It's a very good point that you brought out, and we have been looking at it, but for the buyback to have, you know, a substantial effect, it has to be of a very substantial nature, which at this point, and we also, there is also a diverse opinion on this amongst the shareholders, where quite... A substantial percentage is also looking at a healthy dividend. So we have to go, you know, with whatever is the current majority opinion on this, as well as the feedback given to us by our financial advisors. So it's a good suggestion from you, and we'll...

Keshav Garg, Analyst — Counter-Cyclical PMS

Sir, actually, just taking the point further, now, since the promoter holding is an individual name, so the tax incidence on dividend is 36%. So, whereas if company does an open market share buyback and promoters do not participate, so the promoter shareholding will go up to that extent. And, sir, at a later stage, whenever the sentiment is good and our stock price is doing well, promoters can sell the shareholding in the open market and bring their shareholding down to the current level, and they need to pay only 14% tax on the gains that they make while selling. So, on one hand, you are paying 36% tax on dividend, and on the other hand, if you follow this, then you will end up paying 14%. So, that's a huge tax saving. So, that is the humble suggestion. And, sir, do we have any capex going forward?

Mutharaman, Head of Investor Relations

Nothing meaningful, no major distinction, as in most of our vans we take on lease, so the other capex are very minuscule.

Keshav Garg, Analyst — Counter-Cyclical PMS

Answer in our subsidiary, what exactly is the business of the subsidiary, and you alluded to the fact that you are expecting it to break even. Is there any capex in the subsidiary level?

Alexander Deby, Other

We had some CAPEX in soundboxes, but I think right now, not as a CAPEX, that is just an inventory case, but it is self-liquidating purchases. No major CAPEX in subsidiary as well.

Keshav Garg, Analyst — Counter-Cyclical PMS

And, sir, what exactly is the business of our subsidiary?

Alexander Deby, Other

Yeah, we are currently looking at multiple products. One is we are distributing sound devices, which after some time we are also hoping to get some recurring revenue from that. We are also doing loan disbursements and white label ATMs as well. So it's a couple of different lines of product for the fintech side. Anything you'd like to add?

Mutharaman, Head of Investor Relations

We provide white-label UPA solutions to urban banks, etc., who otherwise do not, they have migrated to a core banking, but do not have a mobile solutions yet to their customers. So we provide a white-label solutions for these banks. We provide, we have a 20,000-strong BC network, so obviously we help facilitate digital transactions and earn commissions on that. We deploy sound boxes. And the QR codes for banks and NBFCs, then we do tie up with the corporate VC network for a couple of small finance banks to roll out their network to their retail clients. And we are also taking up technology service provider solutions, both in India, and now we are exploring in other markets as well. Understood, sir.

Keshav Garg, Analyst — Counter-Cyclical PMS

Sir, and the receivables went up significantly as on 30th September. So, is this a new normal, or do we expect them to again come down at earlier levels?

Venkataraman, CFO

No, there was one time that the September collections were slightly lower, but it got the October collections, we had a good collection in October, and it got subsequently collected in the first week of October.

Keshav Garg, Analyst — Counter-Cyclical PMS

Understood. Thank you very much and best of luck. Thank you.

Operator

Thank you. Next question is from the line of Rohan from ACMS. Please go ahead.

Rohan, Analyst — ACMS

Hi, sir. If we look at the radiant cash stock price, there has been consistent wealth restriction for the shareholders, almost 60% to 70% from the IPO price, sir. What makes you confident to say that the outlook is promising, and what are the chances of recoup of the investors' losses, sir, since IPO?

Mutharaman, Head of Investor Relations

Yeah, that's true. As in, the stock price probably reflects the reported financial performance as well. We have had a drop in profits, PAT reported, in the last two years and continued in the current quarter. But it was a confluence of different factors. We are taking corrective measures. First is the price revision that we get from the customers should improve our profitability. There are about four factors that CFO listed in his listing as well. We had ventured into two new verticals, basically Radiant Ace Money and valuable logistics. We grossly overshooted the time taken for break-even of these two businesses, but there is clear visibility Ace Money is already almost near break-even levels in this quarter. And Valuable Logistics also has grown 35% top line between Q1 and Q2. And today we can confidently say that we have a strong team there to help improve the revenues to well above the break-even levels before this current financial year. So these two were investments, diversification investments as a long-term strategy that we wanted instead of depending only on retail cash management. So, it is an essential investment for us for the long-term sustainable growth for the company. So, we are expecting those two businesses to start generating cost, contributing positively to the FAT in this current financial area. So, that is number two. We are embarking on a strong cost reduction measures with the help of technology, which were either too not available earlier for us, which we are doing manually. So, that also will definitely start yielding results. So, our hope is to restore our profitability to the IPO time levels. So, on stock price, we don't have any control on how it will move.

Rohan, Analyst — ACMS

Got it, sir. And the next question is, with the UPHR, they have started incurring post Diwali as per the government notification. So what sort of positive impact you expect for your bank and how it will help you?

Mutharaman, Head of Investor Relations

I don't know if this is a trigger or not, but our October performance has been fairly healthy, very healthy. It's a festive season as well, but over a longer period of time, the higher volume is what will attract these MDR charges, so probably cash volumes will improve. We are not able to give a pinpoint, a number on how much growth will come because of this, Thank you. Independent of that, the overall cash circulation in the economy is growing, and the cash volumes that we are handling are growing, although at a lower pace than what we would have liked. But we are placing our bet on adding more clients as well to our network, and that should help drive our growth in the long term.

Rohan, Analyst — ACMS

But if this answers my question, thank you very much for the opportunity.

Operator

Thank you. Next question is from the line of Krushi Parek from Bagal Rock. Please go ahead.

Krushi Parek, Analyst — Bagal Rock

Yeah. Hi, sir. So, what I want to understand is that considering the retail focus that we have, what kind of trends we are witnessing when it comes to the business touchpoint growth or the volume growth, basically the number of touchpoints that we are increasing? Because at certain level, it seems that we are slowing down in that area. So, how is it growing at industry level? How are we looking to tap into it? And what kind of pricing action do we see on the direct front?

Mutharaman, Head of Investor Relations

On the pricing front, we don't make a distinction between direct and bank clients. It is fairly the same pricing mechanism works. Unfortunately, in the sense, the business growth points growth from the banks have not been as robust as it had been in the past, before our listing. So that is why we have embarked on this ambitious growth to improve our direct clients business and have been reasonably successful. Today, it is about 20% of our revenues. Probably in a year or a couple of years, it should reach one-third of our revenues will be from direct clients. We have hired senior resources, sector-specific senior resources who have rich experience in specific sectors, so that should help improve, add more clients. Largely, the focus areas for us will be wherever there is a large amount of cash volume. So, organized retail, NBFCs, hospitals, government businesses, these are the areas where we are. I'm seeing fairly good traction in terms of prospects to add more new clients. Anyway, core business as in e-com, e-com logistics, railways, etc., we are already present with almost all the players. So we are providing limited scope for adding points there. But these sectors, our penetration is the cash. For the industry as a whole, the penetration is low. In NBFCs, in hospitals, in... So, that is where our focus is. We are hiring industry specialists to help grow these businesses as a direct line.

Krushi Parek, Analyst — Bagal Rock

So, first of all, what are the reasons for lower penetration in some of these industries to begin with, considering cash has been handled for a long period of time? And, secondly, what kind of use cases or, you know, cost-benefit is something that we are looking to provide to them to ensure that they outsource their cash management to people like Reelink.

Mutharaman, Head of Investor Relations

Yeah. So, first is, again, why the penetration is low? This service has all along been provided by banks as a premium value-added service to their sales clients. All the clients may thank you. The public sector banks, except... Cash management as a service. If you are an organized retail player banking with any of the public sector banks, you don't have an opportunity to avail a service of this nature. So that is where we are focusing on improving our direct customers where providing this service. Offer this, and public sector banks, other than SBA, probably 50% of the market size. This is about the value proposition. Our value proposition is extremely compelling. For a client to pick up cash every day for 26 days can start with as low as 2,500 rupees for, say, 1 lakh in a day. So that kind of, that is really, I mean, that works out to hardly less than 100 rupees per visit. I mean, you imagine the time and amount saved by the company and correspondingly the safety of that cash. is handling today, handling that cash, loses that money, that is, even one day, that is equivalent to three, four years of service charges that they provide to us. And our, if you can see, our cash volumes in a year are roughly around 1.6 lakh crores. And based on our revenues, if you see, our charges will be hardly few tenths of basis points. Compared to say 2% that an MDR for a credit card is charging. So where is 200 basis points, where is this 20 or 25 basis points that we charge? So again, between cash and credit card, there's a compelling value proposition to use our services. Between doing it on their own and outsourcing also, the safety and the low cost makes it a compelling value proposition.

Krushi Parek, Analyst — Bagal Rock

Okay, and specifically on the organized retail trend or, you know, maybe say some of the other sectors as well, what kind of trend are we observing when it comes to the cash that has been handled on a, you know, per unit basis? Is it like steady? Is it decreasing? Or how is it?

Mutharaman, Head of Investor Relations

The equivalent of same-store sales growth number for our stores, as in for a company as a whole, it is that it is certainly muted growth at about 1.6 lakh crores of cash that we handled in the last year as well as the current year. But the number of points have been steadily increasing. So, in a sense, there is a marginal drop in per store. We are not betting on that growth. The same store sales growth is not what our growth is betting on. Our bet is more on adding more points to this network so that because of the underpenetration, that can help sustain the growth over a long period of time.

Krushi Parek, Analyst — Bagal Rock

Okay, and what kind of touch points do you envisage to increase over the next three, four, five years?

Mutharaman, Head of Investor Relations

Yeah, we are currently close to 80,000 touch points that we handle in a given time of the year. And, I mean, the market is huge. I mean, we believe we will be the market leader in this retail cash management industry at this count. And probably about 40-45% share. So the industry as a whole is handling less than 2 lakh points. India has 2 crore retail outlets, so the penetration level is 1%. So the growth, what we can achieve is fairly large. We have to get our act together in terms of business development and direct clients and explaining the value proposition to get this. Okay.

Krushi Parek, Analyst — Bagal Rock

Sorry, just the number that you mentioned was 2,500 a month, right, per touch point.

Mutharaman, Head of Investor Relations

Yeah, for a starting point of say 1 lakh every day we collect for 26 days, the client will pay, retail outlet will pay 2,500 rupees.

Krushi Parek, Analyst — Bagal Rock

Okay, I understand. And secondly, for you. And secondly, sir, you mentioned that the white-labeled ATM business is something that you are looking to offer. So my one question that I have over here is that ATM growth in India has been pretty much steady, I mean, for the last two, three years, especially with the rise of UKI and everything. What kind of business case does it make to have?

Mutharaman, Head of Investor Relations

We provide software solutions for mobile banking and white-label testing for banks. We don't need to operate any white-label ATMs ourselves. For banks, we provide white-label solutions where, say, for example, there is a XYZ cooperative bank in Mumbai. They have core banking solution, but they don't have a mobile banking solution for their customers. Our solution can be customized to that particular bank, and it will interact with their core banking solutions and their mobile banking enabled. So that is white-label mobile banking solutions. We do have a tie-up with one large ATM service provider for white-labeled ATM solutions that has been going on for the last four years now. I understand.

Krushi Parek, Analyst — Bagal Rock

I understand. And what kind of growth is envisaged over the years, considering the number of ATMs are largely being flat in the system?

Mutharaman, Head of Investor Relations

I think ATM is very, very small in that overall picture. It is more, we have 20,000 plus business correspondence. We have, as in Innocence, we have a target to deploy over 50,000 plus sound boxes in the current year, and those are the bigger revenue drivers and transaction volume from the already installed base.

Krushi Parek, Analyst — Bagal Rock

Okay. And lastly, the pricing hike that you mentioned in your opening remarks. So, lastly, they will be deployed over this next, by December quarter, or some of it close into March quarter as well.

Mutharaman, Head of Investor Relations

Most will be implemented by December?

Krushi Parek, Analyst — Bagal Rock

By December.

David Devithahayam, Other

Before December. Talking about the price division? Price division is being implemented. Some of them are coming through now from 1st of November. So as I mentioned earlier, the impact will be clearly seen in the 4th quarter, and also it will be a steady impact, it will be a good impact in the coming financial year.

Dilip, Analyst — Individual Investor

Okay, thank you so much.

Operator

Thank you. Next question is from the line of Amit, an individual investor. Please go ahead.

Amit, Analyst — Individual Investor

Hi. Am I audible?

Mutharaman, Head of Investor Relations

Yes, it is. Yeah.

Amit, Analyst — Individual Investor

So, sir, just want a couple of questions. One is, in terms of the price hike of 12% to 15% that we've taken, is this across retail as well as banks? And... Or are the bank contracts sort of locked in until renewal and they will reprice later? So do we see that across both the segments? And the second question is, in terms of the guard shortages, do we see that easing after the wage increases that we have given, or do we still see a shortage, and do we expect another round of wage increases or labor code costs coming within the next 12 months that might eat into this price increase?

Mutharaman, Head of Investor Relations

Yeah. First question, most of the hikes are actually from the banks only.

Balakrishnan, Analyst — Individual Investor

Okay.

Mutharaman, Head of Investor Relations

So, banks have, in instance, though we had a running contract, we had to escalate it because of the pricing, manpower increase and minimum wage increase, and banks have not waited for the subsequent renewal, but did an interim increase across the board. Almost all our clients have given that price hike. The second question is, yeah, so the gunman shortage is... We don't have a clear visibility when it will ease, but at this point of time, Kunman costs are high and across specific states only. It is not, as in other sense, there is no problem in most of the north, east, in and the central states. It is peculiar only in a few specific states. We are looking at alternate options to address that as well.

Amit, Analyst — Individual Investor

But do you see that because of the wage increases we've given, do you see this easing, or do you think this will continue for some time? Especially with the government, with the Agniveer tenures being increased, do you see that as being a challenge?

Mutharaman, Head of Investor Relations

I don't think Agnivir will have a direct impact. Agnivir tenure increase will have any direct impact on this immediately. But this is not just for us. It is across the board. Banks have also raised this as an issue.

Amit, Analyst — Individual Investor

And just one follow-up question in terms of the price increases. Has this been taken by all the competitors across the board? Because there's been one M&A which has just completed where a global player has acquired an Indian player. So there is a concern that they may be cutting prices to try and win business. Has any competitor kept prices lower to win business or the industry as a whole has taken this increase across the board?

David Devithahayam, Other

It was, um...

Amit, Analyst — Individual Investor

Thanks, and this price increases across public and private sector banks both, right?

David Devithahayam, Other

Thank you. And customers, and that's what we're doing.

Amit, Analyst — Individual Investor

Okay. Thank you. That's very helpful. Thank you, and good luck for the next couple of quarters.

Dilip, Analyst — Individual Investor

Thank you.

Operator

Thank you. Next question is from the line of Dilip, an individual investor. Please go ahead.

Dilip, Analyst — Individual Investor

The price hike that you have taken, you know, to what extent it is confined to sector? You have around BFSI, e-commerce, retail, et cetera. I'm sure certain, you know, business like Organized Retail, the price hike, you don't have to wait for four, five, six months of pain to go. So you must have already gone to them earlier, right? And it's only for large banks that you had to put on to negotiate. For others, I started eight, nine months back. You must be revising the price, right? My question essentially is, going forward, what is the real impact? The rest of the business, you must have taken, you must have waited for a negotiation to happen.

Mutharaman, Head of Investor Relations

No, no. 80% of our business are through banks. Only 20% is direct customers. Okay.

Dilip, Analyst — Individual Investor

So even the so-called e-commerce is, you know, let me see why you have a picture.

Mutharaman, Head of Investor Relations

See, no, no. See, you understand the way we disclose, we disclose both. And then what is the top one client, top one, top three, top five client, and then top one, top three, top five end customers. The sector that we are giving classification is on the end customers. I may be servicing an e-com customer, but the mandate has come to me through a bank. So I have to negotiate only with the bank for the price increase, not with the e-com player, not with the organized detail player, unless it's a direct customer. Direct clients are only 20%. There, what you say is correct, we have been negotiating for a price increase and have been successful in a few of them as well.

Dilip, Analyst — Individual Investor

So, you know, my, my, you know, what I'm thinking through is that you have increased the price by 12% and, you know, so the business is growing at a particular level, right? For our core business is growing at 2-3-4%. So, Even if you take 12% hike and assuming that most of it falls through, because there will be a parallel in case in certain costs as we go along, you will still not reach the desired profitability. In the call, you said that you are trying to reach the IPO-level profitability gradually and gradually. So, what other levers you have, apart from price increase, to reach to that 20-plus percent kind of a margin, or even medium percent, that kind of a margin? This price height alone won't take you there.

Mutharaman, Head of Investor Relations

That's my question. Yeah. I think CFO explained in the initial call, and I also answered in one of the questions earlier, one of the key reasons why our profitability has dropped. It's also because of the investment in Radiant Valuable Logistics, which is in the standalone number, and in Radiant Ace Money, which is in the consolidated numbers. Both of them are very close to arresting the losses and start contributing positively to the EBITDA and PART in the coming quarters. So that is one big improvement vis-à-vis a year back or two years back, how the numbers will be. The second, obviously, the price hike is one, is going to be the main driver for improvement in profitability. The second is the arrest and losses of these two initiatives. The third one is, as in we are embarking on a, irrespective of the price hike, we are embarking on a strong cost reduction measures with tools that were hitherto not available to us because of the The thing. So, we do expect that a good amount, 70% of our cost is manpower cost. So, wherever there is optimization that we can achieve with the help of these technology tools, we are seriously looking at those, and we are confident that that will also add to our improvement in profitability. Most important in the longer term is that, as we explained, our services have significant scope for growth. The top-line growth of muted performance of 5% to 7% in the past, we believe will be an aberration. We have taken serious corrective measures. We are hiring subject matter experts, individual subject experts at various sectors where we believe there's a significant growth opportunity, and that should start generating results. So these are the four drivers with which we think that over a period we should be able to restore too.

Dilip, Analyst — Individual Investor

Yeah, thank you for the good answer. You know, my last question would be, if I understood you were doing around 10, 12 pros of valuable business, right?

Krushi Parek, Analyst — Bagal Rock

That's the size. Sometimes that, I don't know what's the...

Dilip, Analyst — Individual Investor

It's an operating margin to plus 20% kind of operating margin for you to really change the numbers, isn't it? From what I understood valuable, it's a very small part of the business. To swing the margin, even if it goes to break even, it won't really make a difference, isn't it? That's my understanding.

Mutharaman, Head of Investor Relations

No, no, no. In the past, there were losses, yes, negative losses that are getting arrested. Forget about the positive contribution, there were losses which are pulling down our overall EBITDA margins, even on a standalone basis. So that losses are getting arrested, to that extent, it will improve. So each of these will add a few percentage points overall. The biggest will be the price increase. The second biggest will be these arrest of losses in RVL and ASWARE. The third is the cost reduction measures that we are looking at, and over a longer period of time, top-line growth.

Dilip, Analyst — Individual Investor

I'll be right back. Yeah, thanks. Good, my question.

Operator

Thank you. The last question for today is from the line of Balakrishnan, an individual investor. Please go ahead.

Balakrishnan, Analyst — Individual Investor

Hi. Thanks for the opportunity. I just have one question on the, like, just at the macro level, I saw that the next two years is going to be election period, where there are so many elections coming in between states, larger states as well. So... I think in the past, we have seen that during election period, specifically central election period, we saw that the cash movement volume reduction, and because of that, we have some impact at the overall level. So, considering that, the next two years, since we have so many elections lined up, how do we see the impact in our business because of that?

David Devithahayam, Other

No, a good observation from you, but we have had multiple elections in the past as well. So, I'll tell you that our normal movement of cash and cash funds is not impacted, and we take suitable clearance from the Election Commission, and also the police and local electoral authorities are kept informed, and our cash funds carry certificates. We act on the cash movement as far as our industry is concerned because of the elections. Yes, there are certain aspects. Sometimes cash funds are stopped by authorities for a check. But once you see that this is part of normal cash logistics,

Balakrishnan, Analyst — Individual Investor

I understand that our bands won't be kind of blocked during the election period, but I'm coming from the point that, like, generally in the cash movement, right, between the people, like people carrying the cash and using it for shopping or whatever it is, that gets reduced during the election period due to some restrictions, right? And I think if I remember correctly, during the central election period, Here we have some... That two-month period, in fact, we have it in our own business as well. So that's where I'm actually coming. Like, if we have so many elections lined up between now to next two years, do we see any impact in our overall cash volume handling?

David Devithahayam, Other

No, this is a new question. We have not encountered this so far. And in Arun... Movement of cash elections have no material impact. Okay. Okay.

Balakrishnan, Analyst — Individual Investor

Yeah. And the next question I have is, like, so our top-line growth overall, right, we can remove this subsidiary part, the AISP or any other thing, because it's still evolving. But the core cash volume handling, right, so that is almost flat for quite a period now. So... I think, Salary, you mentioned that the points, when I'm increasing the number of points is the one way where we can improve the top line. But is there any target that we have in mind, like how much improvement that we can achieve in the midterm, let's say like two, three years down the line? The cash volume is still flat, but by increasing the number of pin points, what is the target that we have in our mind to improve the top line?

Mutharaman, Head of Investor Relations

Okay, two things. One is, at the point, cash volumes will also grow. Yes, there could be some reduction in existing points, but new points as we add, there will be an improvement in cash volumes as well. And that is how the industry has operated, and the economy as a whole, you see the currency in circulation growing at 8-10% per annum plus. So, the... Yes, the past standalone core business growth has been muted. We have been continuously taking corrective measures, and as I explained earlier, the past growth was driven largely by banks which were offering this service to more and more new clients. Because of whatever reason, banks are not providing that much growth. So we have taken it upon ourselves to develop the business through direct customers, and we have had somewhat success. Today it is 20% of our revenues, but we believe that that will help us in the long-term sustainable growth. So we are deploying serious resources in developing our own direct customer base. So, we have to wait and see how effective our dimensions that we are taking today are.

Balakrishnan, Analyst — Individual Investor

Is there any guideline that you can give for them?

Mutharaman, Head of Investor Relations

Revenue growth, as in our aspiration, is to meet mid-teens of revenue growth.

Operator

The participant's line has been disconnected, sir. As that was the last question, I now hand the concerns over to the management for closing comments.

David Devithahayam, Other

Thank you very much. The performance for this quarter is underwhelming, as this being our lean period, and a sharp increase in manpower costs, which account for 70% of our total costs. The recent price revisions and the ongoing efforts by the management to reduce costs in our core business and turnaround in our other divisions would help improve our performance the remaining quarters. I want to express my gratitude for your continued support of Radiant. We are confident that our continuous efforts will lead promising results for all stakeholders. I thank you all for your time, your very incisive questions, and your continuing interest in our company.

Operator

Thank you. On behalf of Antique Stock Broking Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.