Following its 10-year-long contract win with the State Bank of India (SBI) starting September 2024, digital payment and financial services provider Findi Limited (ASX: FND) has extended its current outsourcing agreement till the new one kicks in. 

The extended SBI contract is expected to deliver $27 to $29 million in revenue and $9 to $10 million in EBITDA over the nine months. Findi’s FY24 guidance remains unchanged as the continuation of the current SBI contract beyond 31 December 2023 was already factored into this guidance. The Company is estimated to deliver total revenue and EBITDA of $67.3 million and $23.6 million in FY24.

Findi Chairman Nicholas Smedley commented, “The SBI contract extension combined with the improved terms of the new SBI contract announced on 30 October will enable Findi to deliver significant organic growth over coming years. The next piece of our strategy, being a white label ATM licence, will further accelerate this growth.”

On October 30, 2023, Findi entered into a new agreement with SBI. Per the terms of this contract, the Company secured a 10-year deal with the State Bank of India (SBI) that is anticipated to yield revenues of up to $620 million. This agreement involves Findi supplying a total of 4,219 ATMs across India.

This contract is a component of Findi’s broader strategy to support the Indian economy in alignment with the Government’s objective of enhancing financial inclusivity. As per the SBI ATM tender conditions, Findi was granted an initial allotment of 3,375 ATMs, with an additional 844 ATMs to be supplied within 12 months of the contract’s commencement, which is projected to occur in early 2025.

The Company has been providing ATMs for SBI through a third-party outsourcing contract since 2016, which was due to expire in December 2023. Now, this contract has been extended till 2024.

The SBI extension agreement does not involve expanding the scope of work or the need for additional capital. This contract extension bridges the time gap between the current and the upcoming SBI contract. Plus, it generates free cash flow, as any debt funding for this contract had previously been retired.

Moreover, the new contract requires replacing the existing 3,912 SBI ATMs. So, Findi will deploy the ones left behind under a white-label license. They are expected to generate an additional annual revenue of approximately $25 to $28 million and an annual EBITDA of $7 to $9 million.

Thanks to improved unit economics, the new SBI contract will boost annual revenue by 28% and EBITDA by 39% per offsite ATM, with revenue in the range of $550-620 million and EBITDA from $250-280 million.