Findi Shares Soar 10% on Strategic Contract Enhancement with SBI

It’s not every day that you hear a new market update that makes you stop in your tracks. But recently, Findi (ASX:FND) has taken center stage as its shares experienced a remarkable 10% surge.

If that sounds like news you would read twice, keep reading for the full update.

An Overview

Findi (ASX:FND), a relatively modest player with a market cap of $28.3 million and low turnover, has recently garnered attention due to its association with one of the world's largest banks, the State Bank of India.

The SBI, headquartered in Mumbai and listed as the 48th largest bank globally, has been a significant factor in Findi's recent success. Findi's shareholders are undoubtedly pleased, with FND shares boasting an impressive 49.5% surge over the last week, a year-to-date performance of 37.5%, and a remarkable 42.59% one-year return.

How did this happen, you ask? Findi (ASX:FND) executed a strategic move by enhancing its existing 10-year contact with the State Bank of India (aka the SBI). In October, the original agreement was secured and involved Findi (ASX:FND) delivering around 4,219 ATMs to SBI.

The initial contract with SBI was a game-changer for Findi (ASX:FND), promising substantial revenue over the next decade. However, the company extended its existing contract with SBI, which was set to expire in December, until September 2024.

This extension covers the transitional period required to replace the ATMs under the recently secured 10-year contract. This indicates massive earnings between $250-$280 million for the company. It also has an expected revenue range of $550-$620 million.

An image of an upward graph and a man holding money in his hands.

Details and Implications

What makes this move even more strategic is that it ensures a continuous stream of revenue for Findi (ASX:FND) during the transition between the existing contract and the new one. The company plans to fund this contract through its free cash flow and new bank facilities, emphasizing financial prudence in its business strategy.

The extension of the white-label ATM contract is a noteworthy component of this development. Findi (ASX:FND) will provide white-label ATMs to SBI until September 2024, enhancing the existing relationship between the two entities.

White-label ATMs tend to charge higher fees than branded machines. These machines, despite charging higher fees, provide convenience and accessibility. This makes them a popular choice for faster cash transactions.

This additional revenue stream could contribute significantly to Findi’s (ASX:FND) financial performance over the extended contract period. The decision to extend the contract beyond its original expiration date suggests a mutual understanding of the value each party brings to the table.

For Findi (ASX:FND), this not only secures continued exposure to revenue from one of the world's largest banks but also ensures ongoing free cash generation.

Findi Shareholders' Delight

The market response to the news is evident in the impressive surge of Findi (ASX:FND) shares. With a 49.5% increase over the last week, Findi (ASX:FND) shareholders are experiencing substantial gains.

These numbers highlight the power of a strategic partnership executed at the right time, especially when it involves a reputable entity like the SBI. It is worth noting that Findi's (ASX:FND) market cap of $28.3 million and relatively low turnover make these gains even more significant.

Conclusion

In conclusion, Findi’s (ASX:FND) recent surge in shares, driven by the strategic enhancement of its contract with the State Bank of India, is a testament to the power of well-executed partnerships.

The extended contract not only ensures a steady stream of revenue for Findi (ASX:FND) but also highlights the company's financial prudence and foresight. Investors are sure to keep following future developments to be the first to know about further positive impacts.

Market Cap - AUD 40.48 million with a share price of AUD 1.01 as on 12th Jan 2024