Company Overview:

The company was incorporated as ‘Computer Age Management Services Private Limited’ on May 25, 1988 at Madras, Tamil Nadu as a private limited company under the Companies Act, 1956, and was granted the certificate of incorporation by the Registrar of Companies, Tamil Nadu at Chennai (RoC). The company became a deemed public limited company under section 43A of Companies Act, 1956 on April 15, 2000 and the name of the company was changed to ‘Computer Age Management Services Limited’ and the certificate of incorporation of the company was endorsed by the RoC to that effect. The company became a private limited company, pursuant to Section 43A (2A) of Companies Act, 1956 with effect from March 29, 2001 and the name of the company was changed back to ‘Computer Age Management Services Private Limited’. The certificate of incorporation of the company was again endorsed by the RoC to that effect. Subsequently, the company was converted from a private limited company to a public limited company, pursuant to a special resolution passed by the company Shareholders at the EGM held on September 9, 2019 and the name of the company was changed to Computer Age Management Services Limited (CAMS). Consequently, a fresh certificate of incorporation was issued by the RoC on September 27, 2019. CAMS is a technology driven financial infrastructure and services provider to Mutual Funds and other financial institutions for over two decades. The company also provides technology enabled service solutions to Alternative Investment Funds and Insurance Companies. Besides serving as a B2B service partner. It also serves customers through a variety of touch points such as pan-India network of service centres, white label call centre, online, mobile app and chatbot.

Technical view: Computer Age Management Services ltd:

Key area for growth:

Both MF and non-MF segments see strong revenue growth:

Asset-Based Mutual Fund Revenue– Robust growth in underline assets but yields were broadly stable:
Asset-based mutual fund revenue was up 7.7%/26.8% QoQ/YoY to Rs 2.42bn, lagging the growth in AAUM serviced by CAMS, which was up 8.3% QoQ and 34.3% YoY. The company has mentioned that sequentially the yield during the quarter was stable with depletion of less than 1%.

Non-Mutual Fund Revenue – Strong growth in Non-mutual fund revenue was maintained and its share in revenue to further inch higher: Non-mutual fund revenue rose 4.8%/30.7% QoQ/YoY, driven sequentially by growth in CAMSPay, CAMSKRA and other revenue. The contribution of non-mutual fund revenue was at 13.3%, up by 40bps YoY. The company expects that non-MF revenue could grow by mid to high 20s for coming 1-2 more quarters. The company would also endeavour to increase the share of non-MF based revenue by 2% points every year and take it to 20% in coming 3 years.

Operating Expense – Operating expense rise sequentially due to increments and direct expenses: Employee expense was at Rs 1,130mn, up 7.8%/19% QoQ/YoY, driven on YoY basis by annual increments and additional hirings. Other Opex was at Rs 686mn, up 10%/21.9% QoQ/YoY, driven YoY largely by direct expenses. CAMS has initiated a project to move its mutual fund-based RTA business to cloud. It will take 4-5 years to complete the project. The net impact of this initiative would be around 0.5% on profitability in the initial period till efficiencies start to accrue.

Key segmental developments and related aspects:

Insurance repository business:

• 5 new clients onboarded in Q1, including 3 non-life insurers
• CAMS Rep has achieved eIA additions & policy conversions of around 1mn in 1QFY25
• CAMS Rep has completed integration of SBI General with Bima Central, a platform for eIA sign up and policy servicing for customers One of the leading life insurer has migrated the entire in-force policy base to CAMSRep
• CAMS Rep holds more than 40% market share in E-insurance policies

AIF and PMS business:

• AIF segment revenue was up ~12% YoY.
• The company has won 36 new mandates.
• There are total 18 clients from GIFT City including first overseas fund administration contract signed in 1QFY25
• CAMS has expanded its presence in in GIFT city with additional office space.
• CAMS WealthServ have 148 sign-ups.
• Assets under service in CAMS alternatives were at Rs 2.26 Tn.

CAMSPay:

• CAMSPay registered a revenue growth of 44% YoY and 21% QoQ in 1QFY25.
• CAMSPay has been empaneled by Canara Bank, Indian Bank and HSBC as PA to onboard and support the Bank’s merchants.
• UPI volumes increased 35% MoM with June-24 recording 1.3 million UPI autopay registrations.
• CAMSPay added 25 new logos in 1QFY25 predominantly with NBFCs such as ICICI Home Loans and Neo First.

Finserv - Account aggregator (AA) and TSP business:

• CAMSFinserv registers a revenue growth of 300% YoY albeit from a small base.
• 115 FIUs clients were live in Q1FY25.
• The company had a market share of 16% (in linked accounts) during the quarter.

CAMS KRA:

• CAMS KRA revenue grew by 101% YoY and 11% QoQ.
• CAMS KRA added 31 new financial institutions and FinTech's as its customers.

Think360AI:

• Think 360 has been empaneled by LIC as a Fintech Enabler.
• Think 360 has won the first mandate for Affluence 360, a Data analytics platform for mutual funds.

Valuation and strategy:

Both Mutual fund and Non-Mutual funds segment shown strong revenue growth we expect revenue to show strong growth in coming year and going ahead we expect CAMS to deliver EPS Estimate for F.Y 2025 at 110 as compare to EPS of 78 for current period. We Recommend Buy CAMS at CMP Rs.4285 and add any dips for price target of Rs.4900 keeping view stock has strong support near levels of Rs.4100.