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Computer Age Management Services Ltd>
  • CMP : 2,368.1 Chg : -74.65 (-3.06%)
  • Target : 2,760.0 (15.10%)
  • Target Period : 12-18 Month

08 May 2022

Mixed performance; gradual traction in non-MF pie…

About The Stock

CAMS is a mutual fund transfer agency. It provides technology-driven financial infrastructure & services to MFs and other financial institutions.

  • Largest registrar and transfer agent (RTA) of MFs with ~69% market share
  • It has consistently operated with high (~30%) margins and return ratios
Q4FY22

CAMS reported a mixed performance.

  • Revenue from operations was up 22% YoY to ₹ 243 crore. Sequential growth remained subdued at 2.3%
  • EBITDA up 25% YoY at ₹ 116 crore; margins up at 134 bps YoY at 47%
  • PAT was at ₹ 73.8 crore, up 22.8% YoY, though margins declined QoQ
What should Investors do?

CAMS’ share price has grown by ~1.7x over the past two years. Sustainable growth opportunity & market leadership remains positive though richly valued.

  • We maintain our BUY rating on the stock
Target Price Valuation

We value CAMS at ~41x FY24E EPS and revise our target price from ₹ 3500 to ₹ 2760 per share.

Key Triggers for future price performance
  • Structural growth opportunity with equity focus in under penetrated market
  • Increase in contribution from AIF & non-MF business (including CRA, account aggregator, etc) to offset volatility in MF business
  • Technological expertise, long standing client relation and market leadership remain key business strengths
  • Capex & digital opex could keep margins in tight range in coming quarters
New Stock Ideas

Apart from CAMS, in our coverage we also like Nippon Life.

  • It offers a play on under-penetrated asset management industry coupled with strong distribution and focused approach on active & passive AUM
  • BUY with a target price of ₹ 400

Key Financial Summary

(| crore) FY19 FY20 FY21 FY22 4 year CAGR
(FY19-FY22)
FY23E FY24E 2 year CAGR
(FY21-23E)
Revenue 711.7 721.3 735.3 926.9 9.2% 965.7 1030.1 5.4%
EBITDA 217.9 286.6 296.0 424.1 24.9% 436.9 477.0 6.0%
PAT 135.2 172.4 205.3 286.9   302.3 328.0  
EPS (|) 27.7 35.3 42.1 58.7   61.8 67.1  
Managed AUM (| lakh crore) 15.8 18.2 20.0 26.7   31.4 36.6  
RoCE (%) 41.9% 46.0% 72.2% 57.5%   52.0% 50.6%  
P/E (x) 86.5 67.8 57.0 40.9   38.8 35.8  

 

Variance Analysis

  Q4FY22 Q4FY21 YoY Q3FY22 QoQ Comments
Revenue 243.2 199.8 21.7 237.7 2.3 Sequential revenue growth subdued
Yield (bps) 3.6 3.6 6 bps 3.6 8 bps  
Other income 4.3 4.2 2.1 4.1 3.3  
Total income 247.4 203.9 21.3 241.8 2.3  
Operating expenses 131.0 110.7 18.3 124.4 5.3  
EBIDTA (incl other inccome) 116.4 93.2 24.9 117.4 -0.9 Subdued revenue kept QoQ EBITDA flattish
EBITDA margin (%) 47.0 45.7 134 bps 48.6 -151 bps  
Depreciation 15.7 10.6 48.0 13.4 16.9  
Interest 1.8 1.7 2.5 1.8 1.0  
PBT 98.9 80.9 22.4 102.2 -3.2  
Tax 25.1 20.7 21.1 24.9 0.7  
PAT 73.8 60.1 22.8 77.3 -4.5 Weak topline impacted PAT QoQ 
             
Total AUM served 2670000 2230000 19.7 2670000 0.0 Market share largely maintained at 69%
Equity 1100000 780500 40.9 1090000 0.9  
Debt 1570000 1449500 8.3 1580000 -0.6  
             
Total transaction volume (Nos. Cr) 11.5 8.6 34.2 11.1 4.2 Healthy traction in transaction volumes



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