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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

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
FY23E FY24E 2 year CAGR
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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I/We, Kajal Gandhi, CA, Vishal Narnolia, MBA, Sameer Sawant, MBA Research Analysts Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. It is also confirmed that above mentioned Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months and do not serve as an officer, director or employee of the companies mentioned in the report.          


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