Cheap, reliable growth flying under the radar on the ASX

Findi first emerged on a stock screening I undertook as a company with a decent cash balance, a low valuation and a very good growth trajectory. These are the key attributes that still stand today with reliability.

Background

Findi (ASX:FND) is an Australian listed company that owns 80% of an Indian fintech company called Transaction Services India (TSI). TSI has two key divisions, an ATMs business (management and ownership of) and an emerging fintech called Findipay (think Western Union 3.0).

Its head office is in Delhi with an operations centre in India’s tech hub of Pune. It is led by industry veterans Mohnish Kumar and Deepak Verma, who have worked together at TSI for more than 10 years now. Its mid-point forecast revenue and EBITDA for FY25 are $85 million and $32.5 million respectively, with only a market cap of $165 million.

Its midpoint forecast revenue and EBITDA for FY25 are $85 million and $32.5 million respectively, with only a market cap of $165 million.

Cheap growth

Findi recently delivered guidance for 19% EBITDA growth in FY25, this may appear short after EBITDA growth of 63% in FY24, however, FY25 is a year of sowing seeds to benefit the future.

Hamma Capital’s current modelling sees EBITDA grow by 76% to around $57 million in FY26. This represents an EV/EBITDA multiple of 4x. 

We view this as potentially some of the cheapest growth that can be reliably purchased in the market. It had a cash balance of $38 million in FY24 we see no need to raise further capital to achieve growth ambitions.

ATM business

Findi’s ATM business has three key segments:

1. ATM management, whereby Findi will manage 3rd party ATMs.
2. Brown Label ATMs whereby Findi owns ATMs that banks have outsourced to them.
3. White Label ATMs, these are yet to be launched but are similar to convenience store ATMs as they will carry Findi’s brand on them as opposed to a banks.

Findi’s team have a long history and tech expertise in managing ATM operations. They currently have a high growth high margin business in this segment. This has driven most of Findi's revenue and earnings to date.

Findipay

Findipay is Findi’s modern technology arm which facilitates payments for consumers to merchants and financial institutions through a network of merchants. It is still in its infancy as more merchants sign up and create a network effect amongst participants. 

The merchants act like an outsourced bank, providing services to people across India without the need for setting up a bank. Plans continue to develop for Findpay to include other government-related services without large set-up costs. Findpay currently has 38,000 merchants on the platform.

Future growth

FY24 was a massive year of expansion for Findi with the progression of numerous contracts amounting to a substantial lift in revenue and EBITDA. Whilst FY25 will not likely present as significant growth numerous foundations are being laid for a significant step up into FY26 and beyond. The major levers include:

1. White label license approval leading to the establishment of a white label (i.e. franchise ATM business). FND is currently in discussions to purchase a competitor’s white-label business.
2. Organic brown label contract wins. Brown label contracts are high returning high margin contracts that deliver significant IRR outcomes for shareholders
3. Continued Findipay growth. Findipay continues to acquire merchants and deliver scale to its platform. It is soon expected to start to break even and scale.
4. Interchange fee changes. The Indian government has flagged an increase in ATM fees, which depending on which segment will provide numerous benefits to Findi shareholders.

To summarise, it is rare to see a company with so much growth trade so cheaply. It amounts to a low-risk, high-potential return.