Radiant Cash Management Services

Research Lab | Issue #10 : Variant Perception in Radiant Cash Management

Whenever I ask any of my friends about Radiant Cash Management, almost every time, the reply is:

“Yeah, that ATM cash management company.”

If you have not tracked this company, odds are high that you would agree with the above statement.

And of course, it is 100% incorrect.

Now, if I ask you, when UPI and digital transactions are soaring, what do you think about the usage of cash in the economy, the consensus answer is.

“Cash is a dying industry. Its slow death is imminent. It’s not a matter of ‘if’, it’s a matter of ‘when’.”

With all due respect, I believe it is again a 100% incorrect assessment.

And why do I say so?

I will come to that in a bit. I first want to tell you something about variant perception. After that, my response on your answers may make more sense to you. 🙂

Variant perception is a powerful mental model in investing that refers to having a differentiated view about a company, industry, or macro situation compared to the consensus, and being right about it.

It’s a term popularized by investor Michael Steinhardt, one of the greatest hedge fund managers of all time, who said:

“Make all of your decisions as an investor based on variant perception.”

What Does Variant Perception Mean?

In simple terms:

Variant Perception = A non-consensus view + Conviction + Correct outcome

The market is a pricing mechanism driven by collective expectations. If your view is the same as the consensus, then it is already reflected in the stock price. So, in order to outperform, your investment thesis must be:

1. Different from the consensus (that’s the “variant”), and

2. Eventually proven right (that’s the “perception” becoming reality)

Example 1: Tesla (2012–2018)

• Consensus view (2012): Tesla is a loss-making car company that will never scale.

• Variant perception: Tesla is not just a car company—it is a disruptive tech company with strong moats in battery tech, software, and branding.

• Outcome: Tesla became a $1 trillion company.

Investors who saw this variant perception early made huge returns.

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Example 2: HDFC Bank (India, 1990s)

• Consensus: PSU banks dominate; private sector banks are risky.

• Variant view: HDFC Bank has superior underwriting, governance, and growth runway.

• Outcome: HDFC Bank became a compounding machine for decades.

How to Develop Variant Perception

1. Do Deep Independent Research
   Don’t rely on what the market or brokerage reports say. Build your own thesis from first principles.

2. Identify Market Misunderstanding
   Look for cases where the market is overly pessimistic or optimistic, perhaps ignoring long-term optionality or overreacting to short-term noise.

3. Understand Investor Psychology
   Many variant opportunities arise due to behavioral biases—fear, recency bias, herd mentality, etc.

4. Look Where Others Aren’t Looking
   Microcaps, turnarounds, special situations, and spinoffs often provide fertile ground for variant perception.

Mental Edge: It’s Not Just Contrarianism

Variant perception ≠ Blind contrarianism

A contrarian is someone who zigzags when others zag.
A variant perception investor zigzags with reason and evidence.

Simply disagreeing with the crowd is not enough—you must have insights or data that the market hasn’t yet incorporated.

Framework for Practicing Variant Perception

Now that I have given you a brief framework of practicing Variant Perception, let me run through the business of Radiant Cash Management using these 5 steps.

Step 1: Thesis- What is the market expecting

The market is looking at Radiant as an ATM cash management company. The market also expects the cash in circulation in the economy to go down a lot.

Step 2: My view- What do I believe instead?

Radiant specializes in retail cash management, focusing on reverse cash logistics - collecting cash from retail outlets and depositing it into banks. This forms their primary business segment, accounting for approximately 60% of their revenue.

Also, cash in circulation in FY17 was 13.35 Lac Cr. In FY24, that number became 35.15 Lac Cr. Plus, RBI churns cash like an active portfolio investor. The average life of a currency note in India is 1.5 years. So every year, tons of old currency notes are taken back by RBI and new notes are circulated.

Step 3: Evidence- What supports my belief?

These two news articles can help.

https://economictimes.indiatimes.com/news/economy/finance/cash-is-king-along-with-upi/articleshow/109670328.cms?from=mdr

https://www.livemint.com/Industry/TcmUwOGVb7HlUA5vxDe9qI/The-lifecycle-and-cost-of-a-banknote.html

Step 4: What will cause your view to be accepted by the market?

Radiant started launched a new vertical in 2023. Valuable Logistics. It is targeting the jewelry sector, with 1.4 lakh registered jewelers and 3 lakh jewelry outlets in India. Key competitors include Sequel Logistics (₹500-550 crores revenue) and BVC Logistics (₹150 crores revenue).

Radiant initially expanded aggressively with 30 branches and 70 vans but has since scaled back to 12 profitable branches. They've invested ₹15-17 crores since inception and maintain monthly fixed costs of approximately ₹30 lakhs. They've signed contracts with 240 jewelers, though 70% maintain dual relationships with competitors.

The business operates on an advance payment model with fixed rates and offers immediate loss replenishment, compared to competitors' 45-day insurance claim processes. Transportation is split evenly between road and van, with a 48-hour delivery window versus the traditional 24-hour window.

In the last two years, due to rapid investments and slow growth in this sector for Radiant, the margin has taken a hit.

But given the quick realization and rationalization of the store count, I believe in the next few quarters the green shoots of recovery will be in sight.

Step 5: Timeframe- How long are you willing to wait?

This is a difficult one. My view on this may change in the future, so please don’t hold me to that. However, today, I think I would like to give them at least 4-6 quarters.

That’s it. That’s my variant perception in Radiant

It is so simple, right?

Wrong!

Let me now introduce you to the risks of Variant Perception.

Risks of Variant Perception

• You might be wrong: Being contrarian and wrong = losing money.

• Too early is the same as wrong: The market may take longer than expected to realize your view.

• Confirmation bias: Once you form a variant thesis, beware of filtering evidence to just support it

So, what is the biggest risk I see in Radiant?

Let me take a short detour to Philip Fisher and his famous 15-point checklist for investors.

One of them read as follows:

“Does the company have an above‑average sales organization?”

Fisher emphasized that even the best products require effective sales strategies to succeed. He believed that a company's ability to market and distribute its products efficiently is a strong indicator of its potential for sustained growth. An exceptional sales organization not only drives revenue but also builds lasting customer relationships, which are vital for long-term success.

Radiant since its inception, it did not have to do sales for itself as banks and NBFCs did that work for them. They had to just service the end-consumers. Sales was bank’s job. That has been changing in recent years. With direct sales (where customers did not come to Radiant through a bank but through Radiant’s sales effort) now forming 15% of the revenue, and this number has to go up in the future, the ability to sell well is very critical. This, in my view, is the biggest risk for investors (including myself) who are invested in Radiant.

I don’t know how quickly they transform into a formidable sales organization that Philip Fishers admire. But what if they don’t or take a much longer time than what I envisage?

I will have no option but to eat humble pie and exit.

This post focused on variant perception. If you wish to deep dive, check out this one-year-old video.

P.S. Invested. Biased. Not a recommendation.

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And one last thing.

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Team Zen Nivesh.