ASX small-cap stock Findi Ltd (ASX: FND) is surging on Friday and is now 13% higher following an announcement.
The company advised of an acquisition that promises to ramp up its cash flows and earnings in India. Investors have bid the stock higher as they digest the news.
Zooming out, shares in the payments company have climbed more than 640% this year to date (yes, you read that correctly), with a 50% advance in the last month alone. Let's dive in.
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ASX small-cap stock continues expansion
The ASX small-cap stock announced today it has entered a binding deal with Tata Communications Payment Solutions (TCPSL).
Findi will acquire TCPSL's Indicash business in a transaction worth around AUD$75 million. This move marks another step in the company's expansion, adding more than 4,600 operating ATMs to its network across India, with an additional 3,000 ready for deployment.
As part of the Acquisition India's first White Label ATM integrated payment switch is transferring to Findi. Findi's own in-house payment certified switch provides Findi with direct access to all debit and credit card banking facilities across all banks in India.
The payments platform/switch will enable Findi to connect directly with all integrated payments devices like Micro- ATMs, bometric payment devices and UPI based cash withdrawals.
Owning our own payments switch will remove the current cost of utilsing a third party switch and enable Findi to immediately and efficiently expand our co-located ecosystem between our own Findi branded ATMs and our Findipay merchant businesses.
Findi Executive Chairman Nicholas Smedley highlighted the acquisition's strategic importance, saying it showed the company's "strategic growth momentum".
The Acquisition of TCPSL brings scale to Findi by immediately expanding our penetration into new semi-urban and rural regions. Cash accessibility continues to be of critical importance to our customers, and as one of the largest White Label ATM operators in India and the second largest in semi-urban and rural geographies, TCPSL's extensive network of ATMs allows Findi to deliver that service to the most remote parts of the country
This could be a positive for the ASX small-cap stock moving forward.
What about the financials?
According to management, the deal is expected to benefit Findi's cash earnings.
Management projects the deal to contribute revenues of $28 million to $30 million and a net profit of $2 million to $4 million by FY26. It will pay the transaction with cash from its balance sheet.
The acquisition's initial net cash consideration will be AUD$23.9 million, with an additional contingent payment potentially required if the Reserve Bank of India (RBI) approves an increase in ATM interchange fees within 90 days.
TCPSL's cash balance of AUD$51.1 million will remain on Findi's books, alongside several tax benefits worth approximately AU $32.9 million.
Management shifts
As part of the acquisition, the ASX small-cap stock announced a key management change. Deepak Verma, who previously served as CFO, has been promoted to CEO and Managing Director of Transaction Solutions International (India) Pvt Ltd (TSI).
This is Findi's subsidiary managing its Indian operations.
Meanwhile, Mohnish Kumar, formerly CEO, transitions to the role of Vice Chairman.
According to Smedley, Verma's leadership in the TCPSL acquisition positions him well to lead the company's next growth phase.
Deepak has fostered a culture of operational and commercial excellence in the organisation and led the Acquisition of TCPSL while developing the strategy for its integration into the business. Further, he has extensive experience in both operations and finance which make him the ideal person to drive the next stage of growth for the business.
ASX small-cap stock takeout
With the acquisition of TCPSL's ATM business, Findi has taken another step toward expanding its market share.
It continues to grow its footprint in financial services, payments and fintech in the region.
The ASX small-cap stock is up more than 593% these past 12 months, providing a substantial advantage over the broader market.
