CAMS - Computer Age Management Services Limited Share Price

Management Outlook and Key Points:
Outlook: Management expressed confidence in sustained growth despite market volatility, emphasizing strong operational execution and market share gains. They anticipate continued expansion in mutual fund (MF) and non-MF segments, driven by new client acquisitions, product innovation, and international forays like the CeyBank contract. While acknowledging potential yield compression in MF-RTA, they expect margin resilience through automation and cost efficiency.

Major Points:

1. Growth Drivers:

   • MF Segment: Won 3 new MF-RTA mandates (Jio BlackRock, Pantomath, Choice) and migrated a second client from competitors. Equity AUM crossed Rs.25 lakh crore (+51% YoY), SIP registrations rose 50% YoY, and market share in NFO collections hit 70%.
   • Non-MF Segments: CAMSPay (+53% YoY), KRA (+27% YoY), and alternatives (21 new AIF clients, 25 GIFT City clients) showed robust growth. Insurance repository crossed 1 crore policies, with a second life insurer onboarded.
   • International Expansion: First overseas contract (CeyBank) secured, with plans to scale GIFT City operations.

2. Financial Performance:

   • Revenue grew 27% YoY (Rs.370 crore), EBITDA margin expanded 230 bps to 47%, and PAT surged 40% YoY.
   • Non-MF revenue contributed 12.5% of total, targeting 20% in 2"“3 years.

3. Risks & Mitigation:

   • Yield compression from select MF renewals expected in FY26, but margins to remain stable via operational leverage and non-MF profitability (15% EBITDA).
   • Investments in tech (platform re-architecture) and talent to sustain scalability.

4. Future Focus:

   • Scaling digital initiatives (WhatsApp KYC, Bima Central), leveraging micro-SIP regulations, and expanding high-margin non-MF businesses (payments, analytics).

Question 1 (Prayesh Jain):
"First one on this international mandate first of all, what is the size and what are the realizations, yields, and what can be the time frame that we will look at and whether it is the entire asset base or one particular geography that you have won the mandate?"
Answer:
The CeyBank contract is comparable to an Indian client with ~INR1,000 crore AUM, billing a few crore INR annually. Operations will go live by April 2025, focused on regulatory alignment and process adaptation rather than geographic expansion.

Question 2 (Prayesh Jain):
"Second, you mentioned on the shift of AMC... Does the competitive landscape change because we've been... the shift of AMCs in RTA business is a very difficult one?"
Answer:
Churn remains rare due to operational complexity and digital constraints. Migration decisions are driven by service quality, not pricing. Third-party entry is unlikely due to high platform investment requirements (5"“8 years).

Question 3 (Prayesh Jain):
"Third one was on brokerage. You said that you... added one of the top 5 players. Would this... be replacing an existing one? Or... incremental business?"
Answer:
The top 5 brokerage partnership is non-exclusive, expected to capture 20"“25% of payload. Pricing aligns with existing clients, reflecting CAMS' premium service model.

Question 4 (Prayesh Jain):
"Last question is just on this yield pressure... why in this environment, we are facing reduction in yields?"
Answer:
Yield pressure is limited to 1"“2 clients post-renewal cycles, with most contracts stabilized. Margins remain protected via automation and operational efficiency; impact on revenue growth is projected at 1"“2% points.

Question 5 (Abhijeet Sakhare):
"Can you quantify the yield compression... and how should we model it?"
Answer:
Long-term yield compression averages 3"“3.5% annually; FY26 may see higher compression (~4"“4.5%) but margins will be safeguarded via cost controls and non-MF profitability improvements.

Question 6 (Abhijeet Sakhare):
"What is the mix between mutual fund and broking revenues in KRA?"
Answer:
Non-MF contributes 18"“20% of KRA revenue. Broking slowdown impacted growth, but diversification into fintechs and tier-2 brokers mitigated risks.

Question 7 (Abhijeet Sakhare):
"How should we model expense growth?"
Answer:
Expenses to remain stable: employee costs at 32"“33% of revenue, OPEX at 8"“8.5%. Capex prioritizes tech modernization, with muted P&L impact due to capitalization.

Question 8 (Devesh Agarwal):
"How will SEBI's micro-SIP norms impact costs amid AUM slowdown?"
Answer:
Micro-SIPs expand the market by targeting non-salaried investors. Costs are manageable via automation; AUM growth fundamentals remain intact for long-term scalability.

Question 9 (Devesh Agarwal):
"What is the revenue potential of new AMCs like Jio BlackRock?"
Answer:
New AMCs (Jio BlackRock, Angel, Unifi) are expected to scale rapidly, contributing meaningfully post-INR10,000"“15,000 crore AUM thresholds. Profitability aligns with platform efficiency.

Question 10 (Madhukar Ladha):
"Why are AMCs migrating to CAMS from competitors?"
Answer:
Migrating clients cite superior platform robustness, integrated services (KRA, digital), and lower complaint rates. Pricing remains premium, reflecting value over cost.

Question 11 (Dipanjan Ghosh):
"Can non-MF revenue sustain 30%+ growth if markets slow?"
Answer:
Non-MF growth levers include KRA diversification, GIFT City expansion, and Bima Central scalability. Annuity models (payments, repositories) underpin 20% revenue share target by FY27.

Question 12 (Supratim Datta):
"Why don't large AMCs in-house RTA services?"
Answer:
Outsourcing remains cost-efficient (INR130/folio/year) due to platform scale (INR46 lakh crore AUM). In-house replication is economically unviable given infrastructure and compliance costs.

Question 13 (Sanketh Godha):
"Will EBITDA margins hold amid yield pressure?"
Answer:
Margin resilience stems from non-MF profitability (15% EBITDA) improving to 20%+, offsetting MF yield pressures. Automation and operating leverage sustain ~47% margins.

Question 14 (Pranuj):
"What are non-MF EBITDA margins?"
Answer:
Non-MF EBITDA margins average ~15%, with variability across segments. Platform businesses (e.g., repositories) are near breakeven, poised for margin expansion as scale accrues.