Sandstone Insights: Findi strengthens digital payment network with Tata acquisition

ASX code: FND

Classification: Profitable

Need to know

• Tata acquisition adds scale and accelerates digital franchise model
• Deal price provides immediate accretion
• Valuation upgraded on significant financial year (FY) 2026 growth potential

Tata acquisition enhances scale

Findi has acquired Tata Communications Payment Solutions Limited, adding 4600 operational automated teller machines (ATMs) under an existing white-label licence.

This acquisition substantially expands Findi's presence, increasing scale and strengthening its digital franchise model. The additional ATMs will enhance Findi's network and support its strategy to integrate digital payment methods, including credit cards, debit cards, and online wallets.

Deal price is advantageous

The acquisition of Tata Communications Payment Solutions Ltd was made at approximately four times earnings before interest, tax, depreciation, and amortisation (EBITDA), a favourable rate compared to Findi's market multiple of around 12 times FY 2025 estimated EBITDA. This attractive pricing is expected to deliver immediate financial benefits, boosting profitability and market value.

Findi's valuation upgrade

Findi is valued at A$9.68 per share, based on a 10-year discounted cash flow (DCF) analysis and a market EBITDA multiple, equally weighted. The increase from the previous valuation of A$5.93 reflects expected growth in Findi's ATM network and digital services following the Tata acquisition.

The acquisition accelerates Findi's white-label ATM strategy, which is projected to contribute A$54.5 million in revenue and A$15.1 million in EBITDA. Key assumptions include a 15.7 times EBITDA multiple and robust sales and earnings growth in FY 2026, further reinforcing a positive outlook.

Upcoming report to provide key insights

The release of the first-half (H1) FY 2025 results, expected in two weeks, is the next key update. This report will provide deeper insights into Findi's financial performance and the impact of recent acquisitions on its growth trajectory.

Investment view

• Unique access to Indian fintech

Findi offers a rare opportunity as the only Australian-listed company providing access to the Indian financial technology (fintech) market. With over 55,000 locations, including ATMs and merchants, Findi serves more than 2.7 million customers daily. This expansive footprint is set to grow alongside India's rising population and increasing adoption of digital payments.

• Leveraging a stronghold for digital growth

Findi is well-positioned to leverage its robust presence in ATMs and merchant services to cross-sell digital offerings. By using its cash services as a cost-effective customer acquisition channel, Findi aims to transition into a full-service digital banking provider. This dual focus on cash and digital services provides diversification benefits.

• Earnings multiple underscores value

Applying a conservative market multiple of 15.7 times to our updated FY 2026 EBITDA forecast of A$53.6 million results in a valuation substantially higher than the current share price. This highlights the significant value on offer and potential for strong returns as Findi scales its operations.

Risks to investment view

Key risks include macroeconomic factors affecting the Indian economy, regulatory challenges in payment services, and risks associated with management execution.

• _{The information provided by Sandstone Insights does not constitute investment advice and does not have regard to the specific needs of any person who may receive it. No warranty is given as to the accuracy or completeness of the information and any person acting on it does so entirely at their own risk.}